Which of the following properly describes the accounting for factory depreciation?
A) Factory depreciation is a product cost and is expensed as incurred.
B) Factory depreciation is a period cost and is expensed as incurred.
C) Factory depreciation is a product cost and is expensed when the manufactured product is sold.
D) Factory depreciation is a period cost and is expensed when the manufactured product is sold.

Question

Quizplus · Accepted Answer

Factory depreciation is considered a product cost because it is directly associated with the production of goods. It is capitalized as part of the cost of the inventory and then expensed when the manufactured product is sold, aligning the cost with the revenue it helps to generate.

Which of the Following Properly Describes the Accounting for Factory