Costs That Are First Assigned to Inventory Are Called

question 80

Multiple Choice

Costs that are first assigned to inventory are called:

• A) Period costs.
• B) Product costs.
• C) General costs.
• D) Administrative costs.
• E) Fixed costs.

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Definitions:

Manufacturing Overhead

Indirect costs associated with manufacturing, including expenses related to operating the factory like utilities, depreciation, and maintenance.

Machine-Hours

A metric indicating the cumulative operational duration of machinery within a specified time frame, often utilized in calculating overhead rates.

Predetermined Overhead Rate

A rate calculated before the period begins by dividing the estimated total overhead costs by an estimated allocation base, used to assign overhead costs to products or job orders.

Manufacturing Cost

The total expense incurred in the process of producing goods, including raw materials, labor, and overhead.