Reference:
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).
-Advertising campaign for Charlie's Chocolate Factory, no specific products were mentioned in the campaign.
A)Indirect product cost.
B)Indirect period cost.
C)Direct period cost.
D)Direct product cost.

Question

Reference: 
Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).
-Advertising campaign for Charlie's Chocolate Factory, no specific products were mentioned in the campaign.
A)Indirect product cost.
B)Indirect period cost.
C)Direct period cost.
D)Direct product cost.

Quizplus · Accepted Answer

The advertising campaign is not specific to any product line, so it cannot be considered a direct product cost. It is also not incurred as a result of producing or selling the product, so it cannot be classified as a direct period cost. Instead, it is a general expense that benefits the company as a whole and is therefore an indirect period cost.

Reference: Charlie's Chocolate Factory Manufactures Chocolate Bars and Ships Them Directly