Direct materials and direct manufacturing labor become a part of work-in-process inventory on the balance sheet because the direct manufacturing labor transforms the direct materials to another asset, work-in-process inventory.

Question

Quizplus · Accepted Answer

This is because both direct materials and direct manufacturing labor are used in the production process and are essential to convert raw materials into the finished product. As a result, they are included in the cost of work-in-process inventory on the balance sheet until the production process is complete.

Direct Materials and Direct Manufacturing Labor Become a Part of Work-In-Process