Multiple Choice
All of the following are inventory accounts for a manufacturer except:
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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All of the following are manufacturing costs except:
A
Direct materials
B
Factory overhead
C
Sales commissions
D
Direct labor
Verified step by step guidance1
Understand the concept of manufacturing costs: Manufacturing costs are the expenses directly associated with the production of goods. These typically include direct materials, direct labor, and factory overhead.
Define direct materials: These are the raw materials that are directly used in the production of goods. For example, wood used to make furniture.
Define direct labor: This refers to the wages paid to workers who are directly involved in the manufacturing process, such as assembly line workers.
Define factory overhead: Factory overhead includes all indirect costs related to manufacturing, such as utilities, depreciation of equipment, and maintenance expenses.
Recognize that sales commissions are not a manufacturing cost: Sales commissions are classified as a selling expense, which is part of operating expenses, not manufacturing costs. They are incurred after the production process is complete and are related to selling the product.
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