Q743
Costing, which explains how and when scrap affects operating income of company is classified as
A.
inventory costing
AnswerB.
conversion costing
C.
normal scrap costing
D.
abnormal scrap costing
Answer: Option A
Solution
Answer: Option A
Solution:
Costing, which explains how and when scrap affects operating income of company is classified as inventory costing. Inventory is merchandise purchased by merchandisers (retailers, wholesalers, distributors) for the purpose of being sold to customers. The cost of the merchandise purchased but not yet sold is reported in the account Inventory or Merchandise Inventory.