What is typically included in COGS? (1 point)
A. raw materials
B. storage costs for the inventory
C. wages associated with creating the item
D. All of the answers are correct.
D. All of the answers are correct.
D. All of the answers are correct.
To determine what is typically included in the Cost of Goods Sold (COGS), we can start by looking at the definition of COGS. COGS refers to the direct costs associated with producing or acquiring the goods that a company sells. It includes all the costs directly related to the production or acquisition of inventory.
Now let's analyze each option:
A. Raw materials: Raw materials are the basic materials that are used in the production process. Since these materials are directly used in the production of goods, they are typically included in COGS.
B. Storage costs for the inventory: Storage costs, such as rent for warehousing or costs associated with maintaining inventory, are generally not considered a direct cost of production. Therefore, storage costs are typically not included in COGS.
C. Wages associated with creating the item: Wages paid to employees involved in the production process, such as direct labor costs, are considered a direct cost of production. Thus, wages associated with creating the item are typically included in COGS.
D. All of the answers are correct: Based on the explanation above, the correct option is D. All of the answers are correct. Raw materials and wages associated with creating the item are both typical components of COGS.
Therefore, the correct answer is D. All of the answers are correct.