Question

All of the following are true regarding product costs except a.product costs consist of direct labor, direct materials, and factory overhead b.product costs can be found in three accounts on the balance sheet c.product costs include sales and administrative expenses d.product costs are found on the balance sheet until they are sold

Answer 1

Answer:

The correct answer is letter "C": product costs include sales and administrative expenses.

Explanation:

Product costs are directly related to the manufacturing of a product. Product costs include direct labor, direct materials, factory overhead, and production supplies. After the products are finished but not yet sold, product costs are recorded as part of the inventory.

Sales and administrative expenses are not tied directly to the production of a good, thus, they cannot be considered product costs.