Which of the Following Is Considered a Product Cost

question 49

Multiple Choice

Which of the following is considered a product cost?

• A)Utility expense for the current month
• B)Salaries paid to the employees of a merchandiser
• C)Transportation cost on goods received from suppliers
• D)Transportation cost on goods shipped to customers

---

Definitions:

Fixed Production Costs

Costs that do not change with the level of production, such as rent for factory space or salaries for permanent staff.

Variable Manufacturing Costs

Costs that change in proportion to the levels of production or sales volume, such as raw materials and direct labor.

Sales

Sales involve the exchange of goods or services for payment, essentially representing the revenue generated from these transactions.

Absorption Costing

A method in accounting that captures the complete range of manufacturing costs - direct materials, direct labor, and all overhead expenses, both fixed and variable - within the cost of a product.