Which of the Following Items Is Not a Product Cost

question 28

Multiple Choice

Which of the following items is not a product cost?

• A)Freight cost on goods delivered FOB destination to customers
• B)Cost of merchandise purchased for resale
• C)Transportation cost on merchandise purchased from suppliers
• D)All of these answer choices are product costs

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Definitions:

Finance Lease Agreement

A lease in which the lessee has control over the asset being leased and substantially all risks and rewards incidental to ownership, even though legal title may not be transferred.

Residual Value

The estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Implicit Interest Rate

An interest rate inferred from the cost of borrowing, or the return on investment, that is not explicitly stated.

AASB 16

The Australian Accounting Standards Board standard on leases, which outlines the principles for recognition, measurement, presentation, and disclosure of leases.