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

Question

Quizplus · Accepted Answer

Product costs are expenditures that are 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. Selling and administrative expenses, on the other hand, are not considered product costs but are categorized as period costs and are expensed in the period incurred.

Product Costs