How Are Research and Development Costs Reported in the Financial

question 143

Essay

How are research and development costs reported in the financial statements? Why is this treatment required?

---

Definitions:

Factory Labor Costs

The total expense incurred by a company for the labor used in the production of goods, including wages, benefits, and taxes.

Factory Labor Expense

Costs associated with the wages and benefits of factory workers directly involved in producing goods.

Process Costing System

A costing method used in industries where production is continuous, assigning costs to units of product based on the process they go through.

Direct Materials

The raw materials that are used directly in the manufacturing of a product and can be easily traced to it.