A Reason for Not Allocating All the Outgoings Incurred in Bringing

question 20

Multiple Choice

A reason for not allocating all the outgoings incurred in bringing the inventory to its present location and condition to the cost of inventory is:

• A) allocation may not make a material difference to reported profit or to the carrying amount of the inventory
• B) the allocation of some costs may be time-consuming
• C) incidental costs of acquisition may be minor
• D) all of the above are reasons

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Definitions:

Cost Components

The individual elements that contribute to the total cost of a product or service, including materials, labor, and overhead.

Fiberglass Boat

A type of boat made from fiberglass, known for its durability, strength, and lightweight compared to traditional wooden boats.

Ratio

The quantitative relation between two amounts showing the number of times one value contains or is contained within the other.

Preferred Equity

A type of equity which is ranked higher than common stock and usually has fixed dividend payments.