Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 8 - Valuation of Inventories: A Cost-Basis Approach - Review and Practice - Questions - Page 421: 7

Answer

As applied to inventories, cost means the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location.

Work Step by Step

These applicable expenditures and charges include all acquisition and production costs but exclude all selling expenses and that portion of administrative and general expenses not clearly related to production. Freight charges applicable to the product are considered a cost of the goods.
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