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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