Rules of financial reporting (GAAP) require
A)that direct manufacturing costs and a fair share of indirect manufacturing costs be assigned to products.
B)that only producing department costs be assigned to products.
C)that only direct manufacturing costs be assigned to products.
D)that only indirect manufacturing costs be assigned to products.

Question

Quizplus · Accepted Answer

GAAP requires that both direct manufacturing costs (such as raw materials and direct labor) and a fair share of indirect manufacturing costs (such as rent and utilities) be assigned to products in order to properly calculate their cost of production. This helps ensure accurate financial reporting and decision-making.

Rules of Financial Reporting (GAAP) Require