In a traditional manufacturing company, product costs include
A)direct materials only.
B)direct materials, direct labor, and factory overhead.
C)direct materials and direct labor only.
D)direct labor only.

Question

Quizplus · Accepted Answer

According to traditional manufacturing cost accounting, product costs include direct materials, direct labor, and factory overhead. Direct materials are the materials that become an integral part of the finished product, direct labor is the cost of labor that can be directly assigned to the production of a specific unit, while factory overhead includes all other manufacturing costs that cannot be directly traced to a specific product, such as rent, utilities, and depreciation of machinery.

In a Traditional Manufacturing Company, Product Costs Include