Under Ind AS 2, which of the following costs are excluded from the cost of inventory and recognized as expenses in the period they are incurred?
A. Fixed production overheads allocated based on normal capacity
B. Abnormal amounts of wasted materials, labor, or other production costs
C. Design costs incurred before the production stage for a specific customer order
D. Costs of conversion
Answer: Option B
Solution (By JKSSB Mock Tests)
Ind AS 2 explicitly excludes abnormal waste, storage costs (unless necessary in the production process), administrative overheads not contributing to bringing inventories to their present location/condition, and selling costs from inventory cost.
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