Which of the following describes full costs for a product for profitability analysis?
A) Full product costs are narrower in scope than inventoriable product costs.
B) Full product costs consist of direct materials, direct labour and manufacturing overhead.
C) Full product costs include all costs of the value chain.
D) Full product costs do not include non-manufacturing costs.

Question

Quizplus · Accepted Answer

Full product costs include all costs associated with a product's value chain, including direct materials, direct labor, and manufacturing overhead, as well as non-manufacturing costs such as marketing and distribution expenses. This allows for a more comprehensive profitability analysis of the product, taking into account all costs associated with bringing it to market. Option A is incorrect because full product costs are broader in scope than inventoriable product costs. Option B is incorrect because it only includes the costs of production, not the entire value chain. Option D is incorrect because it excludes non-manufacturing costs.

Which of the Following Describes Full Costs for a Product