An example of shrinkage costs is _____________?
Correct answer: D. clerical errors
- A. incoming freight
- B. storage costs
- C. insurance
- D. clerical errors
Explanation
Shrinkage reflects inventory losses or discrepancies, including those caused by recording and clerical errors. Freight, storage and insurance are ordinary inventory-related costs, not examples of shrinkage itself.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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