Which of the following costs are NOT included in finished goods inventory?
a. Factory overhead
b. Direct labor
c. Direct materials
d. Company president's salary
Homework Answers
Finished goods inventory includes for manufacturers knowing the cost of finished goods in inventory involves inclusion of cost from the initial raw materials to finished products ready for sale to customers.
Direct Labor:
The costs of direct labor involved in the manufacture of finished goods vary depending on the type and complexity of the finished product.
Direct Materials:
Direct materials included in the cost of finished goods inventory include all raw materials needed in production. Raw materials include all components from the tiniest threaded fastener to the label, if applicable.
Factory Overhead:
Any and all expenses that can be directly and indirectly attributed to the production of finished goods that do not fall into the category of direct labor or direct materials should be included in this subcategory.
Hence, Option (d) Company President's salary is not included in finished goods inventory.
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