Which of the following is most likely to be a product cost?
A) Salary of the vice president of sales
B) Advertising for a particular product
C) Drill bits for a drill press used in the plant assembly area
D) Salary of the company receptionist

Question

Quizplus · Accepted Answer

Drill bits are a direct cost related to the production process in the plant assembly area and therefore would be considered a product cost. The salary of the vice president of sales (A) is an indirect cost and would be classified as an overhead cost. Advertising (B) would be considered a period cost because it is not directly related to the production process. The salary of the company receptionist (D) is also an indirect cost and would be classified as an overhead cost.

Which of the Following Is Most Likely to Be a Product