Product costs consist of
A) direct materials and direct labor only.
B) direct materials direct labor and manufacturing overhead.
C) selling and administrative expenses.
D) period costs.

Question

Quizplus · Accepted Answer

Product costs include not only the direct costs of materials and labor, but also indirect costs such as manufacturing overhead (e.g. rent on the factory building, electricity, etc.) that are necessary to produce the product. Selling and administrative expenses, and period costs are not considered as part of product costs.

Product Costs Consist of