BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Are also called period costs
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Are considered an asset until the finished goods are sold
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Become an expense in the period the costs are incurred
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All of these answers choices are correct
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Detailed explanation-1: -Product costs are recorded as an asset on the balance sheet until the products are sold, at which point the costs are recorded as an expense on the income statement.
Detailed explanation-2: -Product costs are treated as inventory (an asset) on the balance sheet and do not appear on the income statement as costs of goods sold until the product is sold.
Detailed explanation-3: -Product costs. This is the correct option. Product costs are the costs that are added to the inventory assets and then allocated to the cost of goods sold expense when the items are sold.
Detailed explanation-4: -Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have product costs that include: Direct labor. Raw materials. Manufacturing supplies.
Detailed explanation-5: -Cost of goods sold (COGS) is the cost of acquiring or manufacturing the products that a company sells during a period, so the only costs included in the measure are those that are directly tied to the production of the products, including the cost of labor, materials, and manufacturing overhead.