A Product Cost Is Deducted from Revenue in the Period

question 48

Multiple Choice

A product cost is deducted from revenue in the period in which:

• A) The related finished goods are sold.
• B) The expenditure is made.
• C) Production of the product begins.
• D) The production process is completed.

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Definitions:

Direct Labor Hour

The amount of time spent by workers directly on the manufacturing of products or services.

Direct Labor

The expenses associated with the salaries of workers directly engaged in manufacturing products or providing services.

Job Order Costing

A cost accounting system in which costs are assigned to specific jobs or batches, typical in companies that produce unique products or jobs.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a relevant driver.