Which of the Following Should Not Be Included in Direct

question 55

Multiple Choice

Which of the following should not be included in direct materials costs?

• A) Materials handling costs.
• B) Materials storage costs.
• C) Incoming freight charges.
• D) Invoice costs of direct materials.
• E) Delivery charges on shipments to customers.

---

Definitions:

Inventory Valuation

The method used to calculate the cost of goods available for sale and determining the ending inventory value for financial reporting purposes.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs necessary to make the sale.

Inventory Purposes

The reasons for keeping stock of goods in a business, typically for sale, production, or avoiding stockouts.