Marsden Company Purchased a Significant Amount of Raw Materials Inventory

Multiple Choice

Marsden Company purchased a significant amount of raw materials inventory for a new product it is manufacturing. Marsden purchased insurance on these raw materials while they were in transit from the supplier. How should Marsden account for the insurance costs ?

A) As an operating expense of the period
B) As a prepaid expense until the inventory arrives
C) As part of the cost of the raw materials inventory
D) As a contra-asset account to inventory