Incidental and necessary costs of inventory: Select one: a. Can be assigned to each inventory unit. b. May be immaterial. c. Can be allocated to cost of goods sold. d. Are subject to the cost-to-benefit constraint when deciding how to account for them. e. All of these

Question

Benjamin Solis

Business

19 April, 12:22

Incidental and necessary costs of inventory: Select one: a. Can be assigned to each inventory unit. b. May be immaterial. c. Can be allocated to cost of goods sold. d. Are subject to the cost-to-benefit constraint when deciding how to account for them. e. All of these

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Karter Butler · Answer 1

E) All of these

Explanation:

Incidental and necessary costs include tariffs (import duties), freight and storage costs, and any necessary insurance costs.

The costs of inventory = the cost of invoice - any applicable discounts + incidental necessary costs

COGS are determined based on inventory costs, and they can be assigned to each inventory unit. Immaterial costs are those that are too small to affect decision making processes.