Direct labor and direct materials are
A) product costs and expensed when the goods are sold
B) product costs and expensed when incurred
C) period costs and expensed when incurred
D) period costs and expensed when the goods are sold

Question

Quizplus · Accepted Answer

Direct labor and direct materials are considered product costs, which are allocated to the cost of goods sold and expensed when the goods are actually sold, not when they are incurred. This is in line with the matching principle of accounting, which aims to match expenses with the revenues they help to generate.

Direct Labor and Direct Materials Are