Question

While the product is being manufactured, which financial statement is the manufacturing costs incurred reflected on...

While the product is being manufactured, which financial statement is the manufacturing costs incurred reflected on before the product is sold. Please explain?
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Answer #1

While the product is still under production/manufacturing, all the associated product/manufacturing costs (direct material, direct labor and material overhead) are recorded in the "Balance Sheet". Such costs are recorded on the asset side (as inventory) in the balance sheet and may be categorized as raw material inventory, work-in-process inventory or finished goods inventory depending on the stage of completion. If the production has not started, the costs will be reported as a part of raw material inventory. If the manufacturing process has started, but not completed, the costs will be classified as a part of work-in-process inventory and if the production has completed and but completed products have not yet been sold, the costs will be categorized as a part of finished goods inventory.

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