In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole's Getaway Spa $($NGS$)$ would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system.

On December $31$ of last year, NGS had $10$ units at a total cost of $$6$ per unit. Nicole purchased $25$ more units at $$8$ in February. In March, Nicole purchased $15$ units at $$10$ per unit. In May, $50$ units were purchased at $$9\mathrm{.}80$ per unit. In June, NGS sold $50$ units at a selling price of $$12$ per unit and $35$ units at $$10$ per unit.

CC$7-1($Static$)$ Part $1$

Required:

State whether the transportation cost included in each purchase should be recorded as a cost of the inventory or immediately expensed.

Multiple Choice

Immediately Expensed

Cost of the Inventory