Doran Technical 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

Question

Quizplus · Accepted Answer

The cost of a toll-free telephone line for customer inquiries is considered a period cost because it is not directly tied to the production process and is incurred regardless of the level of production. Period costs are expensed in the period in which they are incurred.

Doran Technical Company Has Set Up a Toll-Free Telephone Line