Manufacturing Overhead Applied Is Added to Direct Labor Incurred and to What

question 2

Multiple Choice

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

• A) Goods available for sale.
• B) Raw materials purchased.
• C) Work in process.
• D) Direct materials used.

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Definitions:

Product Costs

The total costs directly tied to the creation of a product, encompassing direct labor, direct materials, and manufacturing overhead.

Period Costs

Expenses that are not directly tied to production activities and are accounted for as expenses in the period they are incurred, such as selling, general, and administrative expenses.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the total expenses necessary to transform raw materials into finished goods.

Materials Purchased

This refers to the raw materials bought by a company for the production of goods.