Question

In an effort to reduce record-keeping procedure, companies that sell perishable goods will often enter the standard cost of direct material, direct labor, and manufacturing overhead directly into what account?

A. Work-in-Process Inventory.
B. Finished-Goods Inventory.
C. Cost of Goods Sold.
D. Cost of Goods Manufactured.
E. Sales Revenue.

Answer 1

To simplify record-keeping, the standard costs of direct material, direct labor, and manufacturing overhead for perishable goods are directly entered into the Finished-Goods Inventory account.

Step-by-step explanation:

Companies aiming to reduce record-keeping procedure will often enter the standard cost of direct material, direct labor, and manufacturing overhead directly into the Finished-Goods Inventory account. This practice streamlines the accounting process, making it more efficient by bypassing the recording of these costs in the Work-in-Process Inventory account for perishable goods, which typically move quickly from production to sale. By directly allocating the standard costs to Finished-Goods Inventory, this simplifies the transition of these costs into the Cost of Goods Sold as the goods are sold.