Asked by Alyssa Noriega on Jul 02, 2024
Verified
Which of the following terms accurately describes all three manufacturing costs (i.e. direct materials, direct labour and manufacturing overhead) ?
A) Product costs
B) Variable costs
C) Direct costs
D) Both direct costs and product costs
Manufacturing Costs
Expenses directly related to the production of goods, including raw materials, labor, and factory overhead.
Direct Materials
Resources that are directly linked to the creation of particular products or services.
Direct Labour
Represents the wages of employees who are directly involved in the production of goods or the provision of services.
- Acquire knowledge on the classification and application of direct and indirect expenditures in the manufacturing process.
Verified Answer
JS
jonathan suarez7 days ago
Final Answer :
A
Explanation :
Product costs include all costs involved in acquiring or making a product, which encompasses direct materials, direct labor, and manufacturing overhead. These costs are capitalized as inventory on the balance sheet until the goods are sold, at which point they are expensed as the cost of goods sold. Variable costs and direct costs do not accurately describe all three manufacturing costs because not all manufacturing overhead costs are variable or direct.
Learning Objectives
- Acquire knowledge on the classification and application of direct and indirect expenditures in the manufacturing process.
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