1. Costs that are expensed when incurred are called:
A. product costs.
B. direct costs.
C. inventoriable costs.
D. period costs.
E. indirect costs
2. The accounting records of Manning Company revealed the following costs: direct materials used, $250,000; direct labor, $425,000; manufacturing overhead, $375,000; and selling and administrative expenses, $220,000. Ehrlich’s product costs total:
E. None of the answers is correct
3. How should a company that manufactures automobiles classify its partially completed vehicles?
A. Work in process inventory
B. Raw materials inventory.
C. Finished goods inventory.
D. Cost of goods manufactured.
4. Work-in-process inventory is composed of:
A. direct material and direct labor.
B. direct labor and manufacturing overhead.
C. direct material and manufacturing overhead.
D. direct material, direct labor, and manufacturing overhead.
E. direct material only.
Part 1) OPTION D---- Period costs
Costs that are expensed when incurred are called period costs. FOR eg---- Administrative expenses, sales commission
Part 2)OPTION B----$1050000
Calculation of Product costs
Part 3) OPTION A ----- work in process inventory
Partially completed vehicles will be classified as work in process inventory. Since partial work needs to be completed yet for becoming finished goods.
Part 4)OPTION D---- Direct material, direct labor and manufacturing overhead.
Work in process inventory comprises of direct material, direct labor and manufacturing overhead.
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