Which of the following statements about inventory costs is true?
A) Factory overhead consists of manufacturing costs other than direct materials and direct labour.
B) Net realizable value is the expected sales price plus selling costs.
C) FIFO Reserve is a contra sales account for the excess of FIFO over weighted-average inventory.
D) Purchases discounts increase sales revenue to arrive at net sales.

Question

Quizplus · Accepted Answer

Factory overhead includes all manufacturing costs except for direct materials and direct labor. These can include costs related to the factory or production process, such as maintenance, utilities, and depreciation of equipment, which are necessary for manufacturing but are not directly tied to a specific product.

Which of the Following Statements About Inventory Costs Is True