Although Direct Labor and Raw Materials Costs Are Treated as Manufacturing

question 104

True/False

Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost, factory overhead is charged to expense as it is incurred because it is a period cost.

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Definitions:

Source Of Cash

Refers to the origination of funds in a business, which could include operations, financing activities, or investment activities.

After-Tax

The amount of income or profit remaining after all taxes have been deducted.

Capital Budgeting

The process a business undertakes to evaluate potential major projects or investments.

Cash Flows

The comprehensive total of finances being transferred within and outside a business, affecting its ability to quickly convert assets to cash.