When the Products Are Shipped to Customers, the Cost of Manufacturing

question 276

True/False

When the products are shipped to customers, the cost of manufacturing those products becomes Cost of Goods Sold (COGS)shown on the company's balance sheet.

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Definitions:

Direct Materials

Raw materials and components that are directly used in the production of a product, which can be easily traced and assigned to specific goods.

Direct Labor Costs

Expenses associated with employees who are directly involved in the production of goods or services.

Factory Overhead Account

An account that accumulates all indirect costs associated with manufacturing operations, not directly tied to specific units.

Factory Overhead

All indirect costs associated with manufacturing, including utilities, maintenance, and management salaries, not directly tied to the production of goods.