Indirect product costs incurred are charged directly to the Cost of Goods Sold account.

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Indirect product costs, also known as manufacturing overhead costs, are usually allocated to products using a predetermined overhead rate and recorded in a separate account called Manufacturing Overhead. At the end of the period, these costs are then allocated to products and transferred to the Cost of Goods Sold account through journal entries.

Indirect Product Costs Incurred Are Charged Directly to the Cost