Match the Costs That Might Be Included as Part of the Cost

question 59

Multiple Choice

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment. (Choices may be used more than once.)
-Prices are declining; ending inventory with this method falls between the amounts for the other two methods.

• A)Add to inventory cost
• B)Subtract from inventory cost
• C)Not an inventory cost

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Definitions:

Short-Run Price

The price level of goods or services in a market that is determined over a short period, where some costs can be considered fixed.

Special Price

A discounted rate offered for a product or service outside of its standard pricing.

Differential Cost

The difference in total cost that will result from selecting one alternative over another in decision-making processes.

Unit Cost

The cost incurred to produce, store, or purchase one unit of a product or service.