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
Answer: The cost of this toll-free line would be classified as d. Period cost.
Explanation: The cost of a free telephone line for customer inquiries regarding the computer hardware produced by the company would consist of a cost of customer service or follow-up after having made a sale that would be useful to retain customers but is a cost that could be classified as "marketing" cost.
