Which of the following properly describes the accounting for indirect labor costs?
A) Indirect labor costs are product costs and are expensed as incurred.
B) Indirect labor costs are period costs and are expensed as incurred.
C) Indirect labor costs are product costs and are expensed when the manufactured product is sold.
D) Indirect labor costs are period costs and are expensed when the manufactured product is sold.

Question

Quizplus · Accepted Answer

Indirect labor costs are considered product costs because they are necessary for the production process but cannot be directly traced to specific units of product. These costs are capitalized as part of the inventory value and expensed as cost of goods sold when the finished goods are sold, not when they are incurred. This matches the expense with the revenue that the expense helped to generate, adhering to the matching principle in accounting.

Which of the Following Properly Describes the Accounting for Indirect