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ABC Company recently purchased inventory for $100 million, and incurred direct labor costs of $10 million,...

ABC Company recently purchased inventory for $100 million, and incurred direct labor costs of $10 million, production overhead costs of $15 million, and storage costs of $7 million for storing finished goods inventory. What costs should be included in inventory?

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Answer #1

Given,

purchased inventory for $100 million

incurred direct labor costs of $10 million

production overhead costs of $15 million

storage costs of $7 million (for storing finished goods inventory)

Solution :

Raw material, Direct Labour & production cost should be included in Inventory.

Storage cost for storing finished goods inventory is not a part of inventory, Hence Storing cost should be recognized as expense.

Calculate Invetory using below formula :

PLEASE THUMBS UP :)

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