CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Keith Company incurred the following costs in 2015:

Merchandise purchased for resale: $20,000
Sales commissions: $4,000
Interest on accounts payable: $1,000
Freight in: $500

How much should be included in the cost of merchandise inventory?
A. $20,000
B. $21,000
C. $20,500
Explanation: Cost of inventory includes material purchase costs and incidental costs. Incidental costs include freight charges. Therefore, inventory cost is material purchase costs of $20,000 plus freight charges of $500.

User Contributed Comments 3

User Comment
rpfranca Sales comission is SG&A line, not costs.
jpducros Note we are talking about freight in. Freight out would not be included.
1016017829 @jpducros many thanks for the tip, is usefull
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