Product costs are:
A) expensed on the income statement when incurred.
B) treated as an asset and depreciated.
C) inventoried until the units are sold.
D) considered current liabilities until paiD.
Product costs are counted as part of the inventory until the product is solD.

Question

Quizplus · Accepted Answer

Product costs, which include direct materials, direct labor, and manufacturing overhead, are inventoried until the units are sold. Once sold, the costs are transferred from inventory to cost of goods sold on the income statement. This method of accounting is known as the cost of goods sold (COGS) method.

Product Costs Are