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Purchase of inventory cost $1000, Intial testing cost $25 Carriage inward $100 Rebate $50 What is cost of inventory?

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Question added by Wasim khan wazir , Finance Specialist , Mott Macdonald
Date Posted: 2015/11/24
Sufiyan Raza
by Sufiyan Raza , Senior Document Controller , Olsen & Partners Interiors LLC

Inventory cost includes all direct costs and the answer is+-=

Syed Abdul Hafeez Nahri
by Syed Abdul Hafeez Nahri , Assistant Manager Accounts and Controls , Pakistan Telecom Mobile Limited (a subsidiary of Etisalat Group)

All above costs are relevant cost, except for initial testing cost. Initial testing cost may be relevant if it is a quality assurance cost and it is directly proportional to the acquisition of the inventory i.e. if the procurement of inventory increases (in terms of quantity) subsequently the testing cost will be increased.

 

However, if initial testing is a one time cost and is not related to subsequent procurement, then it will be considered as a sunk cost and shall be charged as an indirect cost.

abdulaziz khorshid
by abdulaziz khorshid , CREDIT MANAGER , RASHED ABDUL RAHMAN ALRASHED

all expenses including except the testing cost 

Shahrol Aizat Othman
by Shahrol Aizat Othman , Chief Financial Officer , Saudi Oil Company

From Historical Cost (Financial Accounting) it will include all costs associated to produce the inventory.  However looking at Management Accounting perspective initial testing cost can be disregarded as it is a sunk cost.

Fahad Saleem
by Fahad Saleem , Assistant Manager Finance , STREIT GROUP

Calculating inventory cost doesn't include the testing cost.So the cost would be.

Saji Soman
by Saji Soman , Chief Accountant , Al Redha Insurance Brokers LLC. (Dubai)

Inventory cost will be USD/-

Basit Shakoor
by Basit Shakoor , Audit Supervisor , WTS Saudi Arabia

testing cost will be included as well,asset definition include and cover this as well.$

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