Which of the following would be used to determine if a cost is considered inventoriable (for...
Which of the following would be used to determine if a cost is considered inventoriable (for external reporting purposes) or a period cost?
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A. Where the cost was incurred. |
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B. When the cost was incurred. |
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C. Why the cost was incurred. |
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D. How the cost was incurred. |
Homework Answers
OPTION B------ When the cost was incurred
Inventoriable cost is also known as product cost. Product cost is incurred when company produces product, costs specifically attributable to product such as Direct Material, Direct Labour, Manufacturing overhead . Period costs are incurred with the passage of time, they are charged as expense. For eg- Selling and administrative expenses, etc.same are incurred even if company does not produces the product.
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