Question

Which of the costs below would be included in the recorded cost of merchandise inventory?

1) Purchase price
2) Shipping costs
3) Import duties
4) Storage costs

Answer 1

In merchandise inventory accounting, the purchase price, shipping costs, and import duties are typically included in the total cost. Storage costs, however, are not included as they occur after acquisition and are considered period costs.

Step-by-step explanation:

When accounting for the cost of merchandise inventory, certain costs are included to arrive at the total cost. The components that are traditionally included are:

• Purchase price, which is the actual cost of buying the inventory.
• Shipping costs, which are the costs incurred to get the inventory from the seller to the buyer's location.
• Import duties, which are taxes imposed by a government on goods imported from another country.
• Storage costs are generally not included as these are considered to be period costs rather than product costs.

Therefore, in the list provided, numbers 1) purchase price, 2) shipping costs, and 3) import duties would all be included in the recorded cost of merchandise inventory. On the other hand, 4) storage costs after the inventory has been acquired are not included because they do not contribute directly to the acquisition or production cost of the inventory.