Product costs can be classified as one of three types: direct materials, direct labor, or overhead.

Question

Quizplus · Accepted Answer

This statement is true. Product costs are generally classified into these three categories to help companies track and understand the various costs associated with producing and selling goods. Direct materials refer to the raw materials and inputs used in production, direct labor is the cost of paying employees who work directly on the product, and overhead includes all other production costs such as rent, utilities, depreciation, and indirect labor.

Product Costs Can Be Classified as One of Three Types