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

Question

Quizplus · Accepted Answer

The cost of the toll-free telephone line would be classified as a period cost, which is a cost that is not directly related to the production of goods or services. It is instead associated with general business activities and is expensed immediately in the period incurred.

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