When Manufacturing Products, Direct Labour and Direct Materials Are Classified

question 218

Multiple Choice

When manufacturing products, direct labour and direct materials are classified as

• A) period costs and expensed when incurred.
• B) period costs and expensed when the goods are sold.
• C) product costs and expensed when incurred.
• D) product costs and expensed when the goods are sold.

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Definitions:

Excavation

The process of removing soil, rock, or other materials from a site to form an open hole or cavity.

Purchase Discount

A reduction in price granted by a supplier to a buyer for early payment of an invoice.

Freight-In

The cost associated with transporting goods into a warehouse or to the buyer, often included in the inventory cost.