Q16-5SE-b
Question
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
b. Cost of computer software to track WIP Inventory
Step-by-Step Solution
Verified Answer
The cost of the computer software to track WIP inventory will come under the product cost.
1Definition of WIP inventory
The WIP stands for Work in Progress inventory. It includes all the inventory that is in the manufacturing process but not yet complete.
2Identification of cost
The correct option is Product cost.
In this case, the company has incurred on the work in process inventory of the business, which is the products of the company. So, it will come under the product cost.
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