The three basic elements of the cost of a manufactured product are: a. indirect materials, indirect labor, and manufacturing overhead b. merchandise inventory, work in process, and finished goods inventory c. direct materials, work in process, and finished goods inventory

The three basic elements of the cost of a manufactured product are: a. indirect materials, indirect labor, and manufacturing overhead b. merchandise inventory, work in process, and finished goods inventory c. direct materials, work in process, and finished goods inventory

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The three basic elements of the cost of a manufactured product are:

a. indirect materials, indirect labor, and manufacturing overhead

b. merchandise inventory, work in process, and finished goods inventory

c. direct materials, work in process, and finished goods inventory

d. direct materials, direct labor, and manufacturing overhead

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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