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2 years ago

Why are incidental costs sometimes ignored in inventory costing? Under what accounting constraint is this permitted?

1 answer:

defon2 years ago

4 0

Incidental costs sometimes are ignored in inventory costing because Incidental expenses are minor, non-budgeted expenses that are not directly related to primary service and do not arise during the normal course. Incidental cost which include the costs of transportation, meals, and lodging are common when an employee travels for business Inventory costs.

By calculating the most economic order quantity the firm attempts to determine the order size that will minimize the total inventory. Such practice of ignoring the incidental cost is permitted by materiality constraint because such cost will not affect the decisions of the business entity costs.

Materiality constraint means that transactions of little importance should not be recorded. A transaction may be recorded, but its importance and significance should be kept in mind. For example, a newly purchased pencil is an asset of the business. Whenever the pencil is used, a part of the asset is consumed.

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Answer:

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3 years ago

Units Produced 20,000

Alexeev081 [22]

Answer:

Instructions are below.

Explanation:

Giving the following information:

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<u>Under the absorption costing method, the fixed manufacturing overhead is part of the product cost.</u>

Income statement:

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4 years ago

Suppose that when the price of jelly rises by 20%, the quantity of peanut butter demanded at the current price of peanut butter

hodyreva [135]

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Explanation:

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The formula is therefore:

= Percentage change in quantity demanded of Peanut butter / Percentage change in income

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3 years ago

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omeli [17]

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4 years ago