Which of the Following Costs Is NOT Included in Inventory

question 88

Multiple Choice

Which of the following costs is NOT included in inventory under absorption costing?

• A)direct materials
• B)direct labour
• C)fixed selling expenses
• D)fixed factory overhead

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Definitions:

Gross Profit Method

An inventory estimation technique that calculates the cost of goods sold to estimate the ending inventory balance.

Purchase Returns

Purchase returns involve goods sent back to the supplier, usually due to defects, inaccuracies, or dissatisfaction, resulting in a refund or credit.

Ending Inventory

The final value of goods available for sale at the end of an accounting period after all purchases and sales have occurred.

Gross Profit Method

An inventory estimation method used to estimate the cost of goods sold and ending inventory based on the gross profit margin.