When Determining Costs of Jobs, How Does a Company Account

question 119

Multiple Choice

When determining costs of jobs, how does a company account for indirect material?

• A)It is transferred out of raw materials into manufacturing overhead when used.
• B)It is transferred out of raw materials into work in process as used.
• C)It is added to work in process as used.
• D)It remains part of raw materials inventory.

---

Definitions:

Direct Labor Hour

A measure of the amount of time workers spend directly manufacturing a product.

Direct Materials

Raw materials that can be directly traced to the production of specific goods or services and are significant in cost.

Total Cost

The complete amount of costs involved in producing, purchasing, and/or selling goods or services, including fixed and variable costs.

Inventory Information

Details about the quantities, locations, and values of a company's inventory, used for managing and reporting purposes.