Operating expenses are product costs and are expensed when the product is sold.

Question

Quizplus · Accepted Answer

Operating expenses are not product costs, they are costs incurred in running a business such as rent, utilities, salaries, and advertising. They are expensed in the period in which they are incurred, regardless of whether a product is sold or not. Product costs, on the other hand, include the direct materials, direct labor, and overhead costs incurred in producing a product and are expensed when the product is sold.

Operating Expenses Are Product Costs and Are Expensed When the Product