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Question

Which of the following cost are not excluded from the cost of inventories as per AS 2:

A Abnormal amounts of wasted materials, labour, or other production costs Correct Answer Incorrect Answer
B Storage costs, unless the production process requires such storage Correct Answer Incorrect Answer
C Administrative overheads that do not contribute to bringing the inventories to their present location and condition Correct Answer Incorrect Answer
D Normal amounts of wasted materials, labour, or other production costs Correct Answer Incorrect Answer
E Selling and distribution costs Correct Answer Incorrect Answer

Solution

Normal loss which occurs during the production process is apportioned over the remaining number of units and abnormal loss is treated as an expense.

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