Answer (B) is correct . Those tangible inputs to the manufacturing process that cannot practicably be traced to the product, such as wood screws and glue used in the production of school desks and chairs, are referred to as indirect costs. Indirect costs are one of the three components of manufacturing overhead, the other two being indirect labor and factory operating costs.
Answer (A) is incorrect because Direct labor is the cost of human labor that can practicably be traced to the product.
Answer (C) is incorrect because Direct materials are those tangible inputs to the manufacturing process that can practicably be traced to the product.
Answer (D) is incorrect because Period costs are those costs that are expensed as incurred rather than capitalized as part of the cost of inventory.
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