For financial reporting to the IRS and other external users,manufacturing overhead costs are
A)deducted in the period that they are incurred.
B)inventoried until the related products are sold.
C)treated like period costs.
D)inventoried until the related products have been completed.

Question

Quizplus · Accepted Answer

Manufacturing overhead costs are indirect costs that are not directly traceable to a specific product. These costs are allocated to products using a predetermined overhead rate based on a specific allocation base, such as direct labor hours or machine hours. These overhead costs are included in inventory as part of the product cost and are expensed when the related products are sold. This method is known as absorption costing and is required by Generally Accepted Accounting Principles (GAAP) for external financial reporting purposes.

For Financial Reporting to the IRS and Other External Users,manufacturing