Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured.

Question

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Total period costs are not deducted from total cost of work in process to calculate cost of goods manufactured. Period costs are expensed in the period they are incurred and are not included in the cost of goods manufactured. Only the total manufacturing costs (direct materials, direct labor, and manufacturing overhead) are used to calculate the cost of goods manufactured.

Total Period Costs Are Deducted from Total Cost of Work