Products That Are in the Process of Being Manufactured but Are

question 68

Multiple Choice

Products that are in the process of being manufactured but are not yet complete are called:

• A)Raw materials inventory.
• B)Conversion costs.
• C)Cost of goods sold.
• D)Work in Process inventory.
• E)Finished goods inventory.

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Definitions:

Product Costs

Costs that are directly incurred in the production of goods, including direct materials, direct labor, and manufacturing overhead.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and are a major component of its cost.

Direct Labor

Wages paid to workers directly involved in the production of goods or services, as opposed to administrative or managerial staff.

Manufacturing Overhead

All the indirect costs associated with producing a product, which may include the cost of utilities, depreciation of manufacturing equipment, and salaries of managerial staff.