Asked by Brandon Ernst on Jun 19, 2024
Verified
The use of raw materials in the manufacturing process is reported as an operating expense on the income statement.
Raw Materials
Basic substances in their natural, modified, or unprocessed states used in the production or manufacturing of goods.
Operating Expense
The costs associated with the day-to-day operations of a business, excluding the costs of goods sold.
Manufacturing Process
Involves the steps through which raw materials are transformed into a final product, applying various techniques and methods.
- Distinguish between operating expenses and costs directly associated with the manufacturing process.
Verified Answer
LD
LAUREN DAVISJun 23, 2024
Final Answer :
False
Explanation :
The use of raw materials in the manufacturing process is part of the cost of goods sold and is reported on the income statement as a deduction from revenue to arrive at gross profit. It is not reported as an operating expense.
Learning Objectives
- Distinguish between operating expenses and costs directly associated with the manufacturing process.