The Following Are True Regarding Product Costs Except

question 107

Multiple Choice

The following are true regarding product costs except

• A) product costs are found on the balance sheet until they are sold.
• B) product costs consist of direct labor, direct materials, and factory overhead.
• C) product costs can be found in three accounts in the balance sheet.
• D) product costs include sales and administrative expenses.

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Definitions:

Cost of Goods Manufactured

Refers to the total production cost incurred by a company to manufacture products in a given period, including raw materials, labor, and overhead costs.

Sales

Sales refer to the total revenue earned from goods or services sold by a company during a specific period.

Variable Cost

Costs that vary directly with the level of production or service delivery, such as raw materials and direct labor.

Work in Process Inventory

Inventory of unfinished goods that are still in the process of production, accounting for materials, labor, and overhead.