Elan Questions: Reading 33 Understanding the Bal Sheet

CFA Level I
#1

Hey just want to get consensus on this question. 23. Which of the following is least likely included in inventory cost? a. normal wastage b. costs of conversion c. costs incurred to store the final goods Answer is C but I thought there is no wastage included in the inventory cost. Anyone care to discuss? thanks

#2

only abnormal wastage…but if this a normal wastage incurring in a normal production cycle, then you shd include it…they specified it in the reading

#3

right, where should normal wastage be included then?

#4

Normal wastage is included in the cost of inventory ie capitalized as an asset on the balance sheet. Abnormal wastage would be expensed.

#5

thanks, right, normal things are part of inventory, abnormal things expensed

#6

perfect! thank you all for answering