Question

If prime costs = DM + DL then is DM materials purchased or materials used?

Prime costs are found in the _____________ inventory account

Direct costs are found in the _____________ inventory account

Direct costs of production are found in the ______________ inventory account

Costs of production are found in the _____________ inventory account

The difference between TOTAL cost of production for the period and current period cost of production is _____________

In Work in Process inventory – goods completed move to ___________ and can also be called __________ .

In finished goods inventory – goods leaving finished goods go to _____________ . Goods can only leave finished goods if they are ______.

Net Income = ______ - ______ - ______

Gross Profit = ______ + ______

Answer 1

Solution:

If prime costs = DM + DL then DM is materials used

Prime costs are found in the Work In Process inventory account

Direct costs are found in the Work In Process inventory account

Direct costs of production are found in the Work In Process inventory account

Costs of production are found in the Work In Process inventory account

The difference between TOTAL cost of production for the period and current period cost of production is "Beginning WIP"

In Work in Process inventory – goods completed move to Finished goods and can also be called Finished goods inventory.

In finished goods inventory – goods leaving finished goods go to Cost of goods sold. Goods can only leave finished goods if they are Sold.

Net Income = Sales - Cost of goods sold - Operating expenses

Gross Profit = Net Income + Operating expenses