Which of the following is not a product cost?

Which of the following is not a product cost?
Which of the following is not a product cost? O Advertising costs. O Direct materials. Indirect manufacturing costs. anufacturing overhead. Direct labor. 4 Previous

Answer

General guidance

Concepts and reason

Product costs: Product costs are related to production of goods and would have not been incurred if the company would have not produce the product. The product costs could be either variable or fixed costs. The variable cost would vary with volume of goods produced and the fixed costs would remain the same.

Fundamentals

Manufacturing overhead: The manufacturing overhead is the factory cost incurred in manufacturing the goods. The manufacturing overhead includes both variable cost and fixed costs. These cost include factory rent paid, depreciation of factory machinery and other factory related costs. Direct material: The raw material is the basic component required to manufacture the goods. These raw material are processed into finished goods. Raw material is one of the direct costs incurred in manufacturing the goods. Direct labor: Direct labor is another direct cost incurred in manufacturing the goods. Certain manufacturing process requires manual intervention and therefore wages are paid to the workers of the factory, this wages paid is known as direct labor cost. Indirect manufacturing costs: Indirect manufacturing costs are the cost incurred for manufacturing the product which are not directly related to the product but are required so as to complete the production of goods. Advertising costs: Advertising costs are the marketing cost incurred by the company so as to promote the product manufactured by the company and is therefore part of selling costs of the business. Products are advertised so as to increase its popularity and therefore increase the revenue of the business from sale of product.

Step-by-step

Step 1 of 2

Direct material is the component required to produce the product, indirect manufacturing costs are the costs not directly related to production but are incurred to produce goods, manufacturing overhead are the factory overhead which are incurred to produce the product and direct labor cost is the wages paid by the company for use of direct labor hours which are required for the production of goods. All these costs are directly or indirectly incurred in manufacturing the goods and therefore are product costs. Thus, direct materials, indirect manufacturing costs, manufacturing overhead and direct labor are product cost

Product costs are the cost incurred by the company to produce the goods, if the company had not manufactured the goods then these costs would not have been incurred. The direct material, indirect manufacturing costs, manufacturing overhead and direct labor are such costs which are required for the production of costs and if these are not incurred company will not be able to manufacture goods and therefore they are classified as product costs.

Step 2 of 2

Advertising of product is not required to manufacture the product, these costs is incurred so that the public is aware of the product which would help the company to increase the sale of the product and is therefore incurred after production of goods and is not a product costs.

Thus, advertising expense is not a product costs.

The advertising expense is not a product costs.


Product costs are the cost incurred related to the production of goods and advertising costs is incurred for increasing the sale of the business and is part of selling expenses. These costs are incurred to promote the product manufactured by the company and generally incurred post manufacturing of the product and therefore advertising costs is not a product cost.

Answer

The advertising expense is not a product costs.

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