Measurement of Inventories

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..... chase Cost of Conversion Other costs incurred to bring the inventory to present location and condition. Cost of Purchase Cost of purchase includes all the costs incurred to purchase the material. The following items are directly related to the purchase of material: ₹ Purchase Price i.e., Basic Price of Material XXX .....

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..... s like labour, factory rent, fuel costs, power expenses, factory maintenance (factory overheads) and other items. Allocation of Cost - They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect costs of production that remain relatively constant regar .....

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..... inventories and recognised as expenses in the period in which they are incurred are: abnormal amounts of wasted materials, labour or other production costs; storage costs, unless those costs are necessary in the production process before a further production stage; administrative overheads that do not contribute to bringing inventories to their present location and condition; and s .....

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