MANUFACTURING ENTITY
All costs and expenses incurred by a manufacturing entity are considered product costs rather than period costs TRUE FALSE
FALSE
Finished goods inventory is an asset, but inventories of raw materials and work in progress are not considered assets until production is completed TRUE FALSE
FALSE
Manufacturing entity usually has three separate inventories: raw materials, work in process and finished goods TRUE FALSE
FALSE
Prime costs consist of direct materials and direct labor. Conversion cost is essentially direct labor TRUE FALSE
FALSE
Manufacturing costs are regarded as expenses of the current period and are expensed when incurred TRUE FALSE
TRUE
Manufacturing overhead includes all manufacturing costs except direct labor and direct materials TRUE FALSE
TRUE
Product costs are the costs of purchasing or manufacturing inventory and considered as assets until the goods are sold TRUE FALSE
TRUE
Raw materials inventory refers to the direct materials on hand and available for use in the manufacturing process TRUE FALSE
TRUE
The product costs are all deducted from revenue in the period in which they are incurred TRUE FALSE
TRUE
The wages paid to supervisors are an example of indirect labor TRUE FALSE
TRUE
The direct labor account is debited a. at the end of the payroll period, when employees are paid b. when a new factory employee begins work c. when related labor costs are transferred into the Work in Process Inventory account d. when the goods manufactured are completed
a
Each of the following is true with respect to product cost, except a. direct labor is an example of product cost b. product costs are deducted from revenue when the manufacturing process is completed c. product costs are not regarded as expenses of the current period d. product costs represent inventoriable costs
b
The purchases-raw materials account is debited when a. direct materials are placed into production b. direct materials are purchased c. indirect materials are placed into production d. indirect materials are purchased
b
Which of the following is not likely to be treated as a product cost? a. depreciation on the factory b. interest paid on the notes payable c. portion of the cost of running the quality control department d. wages paid to factory workers
b
Manufacturing costs would not include a. depreciation on factory equipment b. indirect labor c. indirect material used d. sales salaries expense
d
