Which of the following correctly 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 are not directly traceable to specific units of product. These costs are capitalized as part of the inventory value and only expensed as cost of goods sold when the finished goods are sold.

Which of the Following Correctly Describes the Accounting for Indirect