Process Analysis
... Income Summary is a clearing account that in turn is closed to Retained Earnings to complete the closing process. The closing process consists of transferring the balance of each temporary account to the clearing account. ... Direct costs include inventory costs based on beginning and ending inventories ¡ª computed in the same manner as retailers, and it also includes the costs of raw material, and work-in-process inventories, PLUS direct labor costs. ... Supplies that are not consumed during the manufacturing process are included as indirect costs.