When manufacturing products, direct labour and direct materials are classified as
A) period costs and expensed when incurred.
B) period costs and expensed when the goods are sold.
C) product costs and expensed when incurred.
D) product costs and expensed when the goods are sold.

Question

Quizplus · Accepted Answer

Direct labor and direct materials are considered product costs, which are capitalized as inventory on the balance sheet and expensed as cost of goods sold when the goods are sold.

When Manufacturing Products, Direct Labour and Direct Materials Are Classified