Jul 24

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Inventoriable Costs

See also:
Just in Time Inventory System
Perpetual Inventory System
Inventory Turnover Ratio Analysis
Days Inventory Outstanding

Inventoriable Costs

In accounting, inventoriable costs refer to all costs incurred to obtain or produce the end-products. Apply these costs to the products the company produces and sells. The cost of raw materials, direct labor, and part of overhead are all examples.

Before the products are sold, these costs are recorded in inventory accounts on the balance sheet and are treated like assets. You can also use product costs instead. When the products are sold, expense these costs as costs of goods sold on the income statement.

In sum, these costs are inventoried on the balance sheet. This occurs before being expensed on the income statement. Compare inventoriable costs, or product costs, to period costs. They are not directly linked to production. They are expensed in the period in which they are incurred.

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inventoriable costs

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inventoriable costs


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