Question

Inventoriable costs: A) Include administrative and marketing costs B) Are expensed in the accounting period in which the products are sold. C) Are particularly useful in management accounting D) Are also referred to as non-manufacturing costs?

1) Include administrative and marketing costs
2) Are expensed in the accounting period in which the products are sold.
3) Are particularly useful in management accounting
4) Are also referred to as non-manufacturing costs

Answer 1

Inventoriable costs are the costs that are capitalised as inventory until sold when they are recognized as cost of goods sold (COGS). Hence, option 2 is correct.

Step-by-step explanation:

Inventoriable costs, often referred to in accounting and various business contexts, are specifically the costs that are capitalized as inventory on the balance sheet until the products are sold.

At that point, these costs are then recognized as an expense, specifically on the income statement as cost of goods sold (COGS).

Therefore, the correct option that describes inventoriable costs is that they are expensed in the accounting period in which the products are sold.

These costs include all the direct costs associated with the production of goods such as raw materials, labor, and overhead, but do not include administrative or marketing costs, also known as non-manufacturing costs.

Indeed, inventoriable costs are an important factor within management accounting, as they directly influence the valuation of a company's inventory and its profitability.