11.Direct labor and overhead costs that are required to convert raw materials into finished goods are considered to be conversion costs. 12.The James Company has incurred the following costs...







11.Direct labor and overhead costs that are required to convert raw materials into finished goods are considered to be conversion costs.












12.The James Company has incurred the following costs of production:


Direct Materials $350,000
Direct Labor $475,000
Manufacturing Overhead $722,000
Selling and Administrative Costs $256,000
The James Company conversion costs are $1,197,000.












13.The James Company has incurred the following costs of production:


Direct Materials $350,000
Direct Labor $475,000
Manufacturing Overhead $722,000
Selling and Administrative Costs $256,000
The James Company prime costs are $606,000.












14.Product costs are offset against revenue in the period in which the related products are manufactured, rather than the period in which the products are sold.












15.Period costs are deducted from sales to arrive at gross profit.












16.Product costs are charged directly to expense accounts.












17.Product costs become part of inventory and are placed on the balance sheet until the products are sold.












18.Depreciation on a manufacturing facility is considered a period cost whereas depreciation on a warehouse used to store finished goods is considered a product cost.












19.As units are completed, their cost is transferred from the Work in Process Inventory account to the Finished Goods Inventory account.












20.All three inventory accounts (raw materials, work in process, and finished goods) are considered current assets.












May 15, 2022
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