Question

Which of the following cost will not be included in valuation of inventory ?

• A. Cartage
• B. Duties and taxes
• C. Transit Insurance charges
• D. Salesman's commission

Answer 1

The correct option is D Salesman's commission

Inventory valuation is done on the basis of cost of inventory or net realizable value whichever is lower.

Cost of inventory includes the direct cost i.e. direct material, direct labor, direct expenses and the cost to bring the inventory to present location and conditions.

Salesman's commission is an indirect cost, hence it is not part of valuation of inventory.