Case 2: The Family Room (TFR), Inc. is a privately-held furniture manufacturing company. TFR has a December 31st fiscal year end. TFR’s accountants are in the process of preparing the year-end financial statements. TFR’s accounting procedures for manufactured inventory is to include direct material costs as well as direct labor costs and indirect costs in the measurement for manufactured inventory. The company president is wondering if selling costs(sales commissions) may also be allocated to the cost of manufactured inventory when it is produced.
Accounting Issue: Can selling costs be included in the measurement of manufactured inventory?
Your interpretation of the guidance:
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