A primary difference between overhead costs in manufacturing companies and non-manufacturing companies is that
A) GAAP requires both types of companies to use the same treatment for manufacturing costs
B) Only non-manufacturing companies must include overhead costs as inventoriable costs for financial reporting purposes
C) Variable and fixed manufacturing costs are not inventoriable for purposes of financial reporting
D) Only manufacturing companies must include overhead costs as inventoriable costs for financial reporting purposes

Question

Quizplus · Accepted Answer

Manufacturing companies include overhead costs as part of their inventoriable costs, which means these costs are included in the value of inventory on the balance sheet until the goods are sold. Non-manufacturing companies typically treat overhead costs as period expenses, recognizing them on the income statement when incurred.

A Primary Difference Between Overhead Costs in Manufacturing Companies and Non-Manufacturing