EXCLUSIONS FROM THE COST OF INVENTORIES

Exclusions from the cost of inventories

In determining the cost of inventories, it is appropriate to exclude certain costs and recognise them as expenses in the period in which they are incurred. Examples of such costs are:

(a) Abnormal amounts of wasted materials, labour, or other production costs;

(b) Storage costs, unless the production process requires such storage;

(c) Administrative overheads that do not contribute to bringing the inventories to their present location and condition;

(d) Selling and distribution costs.