A Company Incurred Manufacturing Costs That Were Product Costs, but They

question 119

Multiple Choice

A company incurred manufacturing costs that were product costs, but they are NOT classified as either direct materials or direct labour.What are these called?

• A)manufacturing overhead
• B)selling and administrative expenses
• C)period costs
• D)marketing costs

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Definitions:

Setup Cost

The expenses incurred to prepare equipment or a production process for manufacturing a new batch of products, including costs for labor, tools, and materials.

Inventory Holding Cost

Expenses associated with storing unsold goods, including warehousing, insurance, spoilage, and opportunity costs, essentially another term for carrying cost.

Bill of Materials

An all-inclusive inventory detailing the materials, parts, and instructions necessary for the creation, production, or fixing of a product or service.

On-Hand Inventory

The quantity of stock physically available in a warehouse or storage area, ready for sale or distribution.