Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?
A) Product cost
B) Manufacturing overhead
C) Direct labor
D) Period cost

Question

Quizplus · Accepted Answer

The cost of the toll-free telephone line is not directly related to the production of computer hardware, therefore it cannot be classified as a product cost or a manufacturing overhead. Instead, it is a period cost as it is incurred during a specific period of time and is necessary to run the business.

Micro Computer Company Has Set Up a Toll-Free Telephone Line