Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company.How would the cost of this toll-free line be classified?
A) Product cost.
B) Manufacturing overhead.
C) Direct labour.
D) Period cost.

Question

Quizplus · Accepted Answer

The cost of the toll-free telephone line for customer inquiries is not related to the production of goods, therefore it is considered a period cost. It is an expense that is incurred during a specific period and is not directly related to the production process.

Micro Computer Company Has Set Up a Toll-Free Telephone Line