Which of the following are typically included as manufacturing costs in the calculation of Cost of Goods Sold under both perpetual and periodic inventory systems?

• A. Direct materials, direct labor, and manufacturing overhead
• B. Manufacturing overhead, administrative expenses, and interest expense
• C. Selling expenses, administrative expenses, and direct labor
• D. Direct materials, selling expenses, and administrative expenses

Answer: (A)

Verified step by step guidance

1. Understand the concept of manufacturing costs: Manufacturing costs are the costs incurred to produce a product. These typically include direct materials, direct labor, and manufacturing overhead.
2. Direct materials refer to the raw materials that are directly used in the production of goods. For example, wood used to make furniture.
3. Direct labor refers to the wages paid to workers who are directly involved in the production process, such as assembly line workers.
4. Manufacturing overhead includes all indirect costs associated with production, such as factory rent, utilities, and equipment depreciation. These are necessary to support the production process but are not directly traceable to specific units of production.
5. Administrative expenses, interest expense, and selling expenses are not considered manufacturing costs because they are not directly related to the production of goods. Therefore, they are excluded from the calculation of Cost of Goods Sold.