Which of the following correctly 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 process. These costs are capitalized as part of the cost of inventory and only expensed as cost of goods sold when the manufactured product is sold.

Which of the Following Correctly Describes the Accounting for Factory