What cost policy allows for different costing of normal goods and returned goods at the subinventory level?

The cost policy that allows for different costing of normal goods and returned goods at the subinventory level is achieved by manually creating one cost profile for each type of goods. This approach enables organizations to tailor their costing methods to reflect the distinct characteristics and financial implications associated with normal goods versus returned goods.

By establishing separate cost profiles, businesses can ensure that the accounting treatment aligns with the nature of the items being managed. For instance, normal goods may be costed based on factors such as acquisition cost, shipping, and handling, which are typically different from the costing approach for returned goods, which may involve additional considerations like restocking fees or depreciation.

This flexibility in cost management is crucial for accurate financial reporting and inventory valuation, allowing organizations to better understand profitability and cost implications at a granular level. It also aids in making informed decisions related to pricing strategies, inventory management, and financial forecasting.

Other options would not provide the same level of specificity required for handling goods differently based on their status. For example, a generalized cost profile or a flat rate would average out all transactions without addressing the unique requirements of either category, leading to potential inaccuracies in financial representation. Similarly, focusing solely on average costing neglects the need to differentiate between normal and returned goods, which can