1. Leaving expired costs on the balance sheet as assets, thereby not recognizing expenses or losses that would reduce net income
2. Treating period costs as product costs to inflate inventory assets and increase net income
3. Treating product costs as period costs to reduce the cost of goods manufactured and increase gross profit on the income statement, thereby making the conversion area appear more profitable than it actually was
4. Attaching the “random” costs of direct labor (such as overtime) to specific production units to inflate the cost of those units—especially if the buyer is required to pay for production cost plus a specified profit percentage
5. Overstating the cost of ending inventory accounts to reduce the cost of goods manufactured, reduce the cost of goods sold, and increase net income