A Company Has Purchased Some Steel to Use in the Production

question 90

Multiple Choice

A company has purchased some steel to use in the production of steel railings. If this steel has NOT been put into production, it would be classified as

• A)finished goods inventory.
• B)factory supplies.
• C)work-in-process inventory.
• D)direct materials inventory.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product manufacturing process.

Factory Building

A type of commercial real estate designed for manufacturing processes, assembly, and storing materials and goods used and produced by industrial and manufacturing operations.

Rent Expense

The cost incurred by a company for using or occupying property or equipment for business operations.

Administrative Facilities

Facilities and resources provided to support the management and day-to-day operations of an organization.