Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?
A) purchase discounts lost
B) interest incurred during the production of discrete projects such as ships or real estate projects
C) interest incurred on notes payable to vendors for routine purchases made on a repetitive basis
D) interest on a building mortgage

Question

Quizplus · Accepted Answer

Interest incurred during the production of discrete projects such as ships or real estate projects should be capitalized as a product cost as it is directly tied to the production process and increases the cost of the inventory. The other options do not relate directly to the production process or the inventory and should be expensed as incurred.

Which of the Following Types of Interest Cost Incurred in Connection