Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost, factory overhead is charged to expense as it is incurred because it is a period cost.

Question

Quizplus · Accepted Answer

Factory overhead is not a period cost; it is a product cost and is included in the cost of manufacturing, thus becoming part of the finished goods inventory cost.

Although Direct Labor and Raw Materials Costs Are Treated as Manufacturing