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

question 110

Multiple Choice

Match the costs that might be included as part of the cost of inventory to the listed accounting treatment.
-Invoice price paid for resale goods

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

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Definitions:

Period Cost

Expenses that are not directly tied to the production process and are instead expensed in the period they are incurred.

Variable Cost

Costs that change in proportion to the level of output or activity, such as materials and labor involved directly in production.

Fixed Cost

Expenses that do not change in proportion to the volume of goods or services a company produces, such as rent, salaries, and insurance premiums.

Product Cost

The total cost associated with making or acquiring a product, including direct materials, direct labor, and overhead.