Nonmanufacturing costs can be assigned to inventoriable job costs for decision making but not for external financial reporting.

Question

Quizplus · Accepted Answer

Nonmanufacturing costs can be allocated to jobs for internal decision-making purposes to better understand the full cost of a job. However, for external financial reporting, according to generally accepted accounting principles (GAAP), only manufacturing costs (direct materials, direct labor, and manufacturing overhead) are included in inventoriable costs. Nonmanufacturing costs are typically treated as period expenses and are not capitalized into inventory.

Nonmanufacturing Costs Can Be Assigned to Inventoriable Job Costs for Decision