Costs Included in the Value of Inventory Are

question 46

Multiple Choice

Costs included in the value of inventory are:

• A) Purchase price less discounts.
• B) Transportation-in.
• C) Storage.
• D) Insurance.
• E) All of these answers are correct.

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Definitions:

Machine-Hours

refers to the total number of hours that machinery is in operation during a specific period, used in calculating machine-related expenses or allocations.

Overhead Applied

The amount of manufacturing overhead costs allocated to individual products or job orders based on the predetermined overhead rate.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead to products or job orders, calculated before production begins based on budgeted costs and activities.

Finishing Department

The department in a manufacturing process where products undergo final operations, such as painting, polishing, or packaging, before being sold.