Question

Which of the following items does not figure while calculating finished goods storage period?

• A. Excise duty
• B. Selling and distribution costs
• C. Financial costs
• D. Cost of production
• E. Average daily credit purchases

Answer 1

Answer: (E)

Average daily credit purchases

Finished goods storage period = average inventory of finished goods / average daily cost of sales. Where annual cost of Sales =Opening stock of finished goods + cost of production + selling, administration and financial expenses + customs and excise duties - closing stock of finished goods. Thus the figure of average daily credit purchases does nt arises while computing finished goods storage period.