Assessment Task 10-1

True or False

1.Finished goods inventory is an asset, but inventories of raw materials and work in process are not considered assets until production is completed.

2.Manufacturing costs are regarded as expenses of the current period and are expensed when incurred.

3.Product costs are the costs of purchasing or manufacturing inventory and considered as assets until the goods are sold.

4.All costs and expenses incurred by a manufacturing entity are considered product costs rather than period costs.

5.A manufacturing entity usually has three separate inventories: raw materials, work in process and finished goods.

6.Raw materials inventory refers to the direct materials on hand and available for use in the manufacturing process.

7.Manufacturing overhead includes all manufacturing costs except direct labor and direct materials.

8.The wages paid to supervisors are an example of indirect labor.

9.Product costs are all deducted from revenue in the period in which they are incurred.

10. Prime costs consist of direct materials and direct labor. Conversion cost is essentially direct labor.