A product costing system is needed to determine the amount of product costs that should be reported on the income statement as selling and administrative expenses.

Question

Quizplus · Accepted Answer

A product costing system is used to determine the cost of producing a product and includes direct materials, direct labor, and manufacturing overhead. The cost of these factors is included in the cost of goods sold on the income statement, not as selling and administrative expenses. Selling and administrative expenses include other expenses such as marketing, salaries, and office rent.

A Product Costing System Is Needed to Determine the Amount