Which of the following statements concerning manufacturing costs is incorrect?
A) All salaries incurred by the sales department are expensed as incurred.
B) Direct labor costs are recorded initially in an inventory account.
C) Depreciation on manufacturing equipment is a period cost.
D) The cost of direct materials can be readily traced to products.

Question

Quizplus · Accepted Answer

Depreciation on manufacturing equipment is considered a product cost, not a period cost, because it is directly associated with the production process. Product costs are capitalized as part of inventory on the balance sheet and expensed as cost of goods sold when the inventory is sold.

Which of the Following Statements Concerning Manufacturing Costs Is Incorrect