Exercisel: Theory (True or False) 924 10. ll. 12. Manufacturing costs are materials cost, labor cost, factory overhead, and manufacturing expenses. The periodic inventory method is used under the noncost system so that cost of raw materials used, cost of goods manufactured, and cost of goods sold can be easily determined without the need for a physical count of the resources. Under the cost system, the raw materials cost gure is apt to include some items of materials even if they do not form part of the nished product. Under the noncost system, unit cost for the current production cannot be promptly estimated because of inadequate paper work. There must be a decrease in raw materials inventory when raw materials purchases exceed cost of materials used. Cost of goods sold that exceeds cost of goods manufactured results in a decrease in nished goods inventory. The synonyms for factory overhead are manufacturing expenses and factory expenses. In the preparation of the manufacturing worksheet, beginning inventories of raw materials and work in process are debits while the ending inventories are credits. In the preparation of the manufacturing worksheet, all items that are added in the statement of cost of goods manufactured are extended as debits and all items that are deducted, as credits. Under the noncost system, journal entries are made for issuances of materials and completion of goods. Examples of factory overhead are supervision, depreciation of factory machinery and factory fuel and oil. Pilferages of materials and smuggling out of finished goods cannot be easily detected under a noncost system