Which of the following statements describes inventoriable product costs?
A) They are expensed on the income statement when incurred.
B) They are used for external reporting purposes.
C) They include marketing and distribution costs.
D) They do not include prime costs.

Question

Quizplus · Accepted Answer

Inventoriable product costs are costs that are associated with manufacturing a product, such as direct materials, direct labor, and manufacturing overhead. These costs are initially recorded as an asset (inventoriable cost) on the balance sheet and are expensed on the income statement only when the finished goods are sold. Inventoriable product costs are used for external reporting purposes, as they are a key component in determining the cost of goods sold and gross profit. Marketing and distribution costs are not considered inventoriable product costs, and prime costs (direct materials and direct labor) are included as part of inventoriable product costs.

Which of the Following Statements Describes Inventoriable Product Costs