Which Statement Describes Direct Materials in a Manufacturing Setting

question 99

Multiple Choice

Which statement describes direct materials in a manufacturing setting?

• A)Direct materials are used to determine total inventoriable product costs.
• B)Direct materials are used to determine total manufacturing overhead.
• C)Direct materials cannot be separately and conveniently traced.
• D)Direct materials do not become part of the finished product.

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Definitions:

Identifiable Net Assets

Assets of an acquired company that can be assigned a fair value and are capable of being separated or divided from the entity for recognition during an acquisition.

Contingent Consideration

Contingent consideration refers to a payment that may be required in the future, the amount of which depends on certain events or conditions that may or may not happen.

Fair Value

The estimated price at which an asset or liability could be traded in an arm's length transaction between informed, willing parties.

Pro-Rata Share

A portion of something that is divided among participants in proportion to their share, interest, or contribution.