Which of the following statements is true regarding Direct Materials requisitioned, Direct Labor incurred and Manufacturing Overhead applied. Multiple Choice Conversion costs are added to Finished Goods Inventory, while Direct materials are attached to Work in Process Inventory Direct Materials are first requisitioned to the manufacturing overhead account and then are applied to work in process, where direct labor and manufacturing overhead are then added. All three costs are treated as product costs and are expensed when incurred. All three costs initially combine in the Work in Process Inventory account. These are both product and period costs.