Which of the following would be considered a product cost for external financial reporting purposes?
A)Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
B)Cost of a warehouse used to store finished goods.
C)Cost of travel necessary to sell the manufactured product.
D)Cost of guided public tours through the company's facilities.

Question

Quizplus · Accepted Answer

Product costs include all costs necessary to manufacture a product. The cost of sand spread on the factory floor to absorb oil from manufacturing machines is considered a manufacturing overhead cost, which is a component of product costs. This cost is directly associated with the production process, making it a product cost for external financial reporting purposes.

Which of the Following Would Be Considered a Product Cost