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NEW QUESTION: 1
Keith Company incurred the following costs in 2002:
Merchandise purchased for resale: $20,000 Sales commissions: 4,000 Interest on accounts payable:
1 ,000 Freight in 500
How much should be included in the cost of merchandise inventory?
A. $20,500
B. $20,000
C. $21,000
Answer: A
Explanation:
Cost of inventory includes material purchase costs and incidental costs. Incidental costs include freight charges. Therefore, inventory cost is material purchase costs of $20,000 plus freight charges of $500.


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