alleryWhich is NOT included in the cost of inventory?
AFreight inwards charges
BStorage costs of finished goods
CDirect conversion labour
DNon-refundable purchase duties
Answer & Solution
Correct answer: B. Storage costs of finished goods
1. Cost of inventory includes purchase price (less recoverable taxes), conversion costs and costs to bring inventory to present location and condition.
2. Storage costs of finished goods are post-production overheads excluded by AS 2.
3. Freight inwards, conversion labour and non-refundable duties are all part of cost.
_Source: ICAI BoS Foundation Paper 1, Ch 4 "Inventories", §3 (b)_
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