Product costs:
A) Are moved to the income statement for any unsold inventory at the end of the year.
B) Include selling and administrative expenses.
C) Are expenditures identified more with a time period rather than with units of product.
D) Are expensed on the income statement when incurred.
E) Are expenditures necessary and integral to finished products.

Question

Quizplus · Accepted Answer

Product costs are expenditures necessary and integral to finished products, such as direct materials, direct labor, and manufacturing overhead. These costs are capitalized as inventory and expensed on the income statement when the inventory is sold. Choices A, B, C, and D do not accurately reflect product costs.

Product Costs