AS 2

Administration cost never included to inventory

MPR Sanjay Kumar

CA Inter

★ 525

31-Jul-25 06:10

Administration overheads are not included in inventory valuation because they are not directly related to the production or purchase of inventory items. These costs, such as salaries of management or office supplies, should be expensed separately and not included in the cost of goods sold. Including administration overheads in inventory calculations can artificially inflate the cost of goods sold and misrepresent the true cost of producing goods.

Likith kumar Duganapalli

Moderator

31-Jul-25 09:34