question archive Which of the following costs is not capitalized as inventory? a
Which of the following costs is not capitalized as inventory? a
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Which of the following costs is not capitalized as inventory?
a. Costs of delivering finished goods.
b. Factory (manufacturing) overhead.
c. Insurance of factory building and equipment.
d. Factory amortization.
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The correct option is a). Cost of delivering finished goods.
a. Costs of delivering finished goods.
Cost of delivering finished goods is not incurred while making the product or bringing the merchandise to inventory. So it is not attributable to the cost of inventory. Hence the option is correct.
b. Factory (manufacturing) overhead.
Factory overhead is attributed to the cost included in the making or processing of inventory. It must be added with the cost of WIP Inventory and Finished Goods Inventory on the entities statement of financial position. Hence the option is incorrect.
c. Insurance of factory building and equipment.
Insurance of factory building and equipment is treated as overhead and it is attributable to the cost of inventory. Hence the option is incorrect.
d. Factory amortization.
Factory amortization is treated as overhead and it is attributable to the cost of inventory. Hence the option is incorrect.
