Inventoriable costs:
A)include only the prime costs of manufacturing a product.
B)include only the conversion costs of providing a service.
C)exclude fixed manufacturing costs.
D)are regarded as assets until the units are solD.

Question

Quizplus · Accepted Answer

Inventoriable costs refer to the costs incurred in the production of inventory or goods. These costs include direct materials, direct labor, and manufacturing overhead. They are treated as assets until the products are sold, at which point they are expensed as cost of goods sold. This means that option D is correct, as it states that inventoriable costs are regarded as assets until the units are sold. Option A is incorrect because inventoriable costs include both direct materials and direct labor, not just prime costs. Option B is incorrect because service companies do not have inventory, and therefore do not have inventoriable costs. Option C is incorrect because fixed manufacturing costs, such as rent and depreciation of equipment, are included in inventoriable costs.

Inventoriable Costs