Question

If a company purchases plastic that they will melt and form into milk jugs that they will then sell to milk plants, the cost of the plastic will be categorized as what type of expense?

Answer 1

If a company purchases plastic that they will melt and form into milk jugs that they will then sell to milk plants, the cost of the plastic will be categorized as the cost of goods sold. The cost of goods sold is the direct cost related to the production costs of a product sold by a company.