Which of the following is a product cost for external financial reporting purposes?
A)Amortization of office equipment used by the CEO.
B)Advertising costs.
C)The salary paid to the Vice President of Finance.
D)Rent on a factory.
E)Sales commissions.

Question

Quizplus · Accepted Answer

Rent on a factory is a product cost because it is directly related to the production of goods, which is a necessary expense for a business to generate revenue. This cost would be included in the calculation of cost of goods sold and inventory valuations for financial reporting purposes. The other choices are all period costs, which are not directly related to the production of goods and are expensed in the period they are incurred.

Which of the Following Is a Product Cost for External