I am currently preparing cost sheet for one my companies. I have following query: Company pays a substantial amount for waste disposal to a third party contractor. Who comes to company and collects the waste. The waste generation is inherent to the production process. I feel the cost of waste disposal should be included in cost of production. Company wants to include in cost of sales. If it is included in cost of sales, it will not affect the inventory valuation. In case, anyone has dealt any such case, please explain.
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Treatment of waste disposal cost
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Watste disposal can be considered as Pollution Control cost.Pollution Control cost, if material, shall be presented in the cost statement as a separate item of cost.According to me,you can consider it as a part of production cost.Cost /unit of price of material will remain same whether you include it in production cost or cost of sales.
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