The three components of product cost include:

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The three components of product cost are direct material, direct labor, and overhead (indirect costs such as rent, utilities, etc.) This is the most common approach to calculating product cost and is used to determine the total cost of producing a unit of product. Option A includes indirect material which is included in overhead. Option B includes indirect labor which is also included in overhead. Option D includes only indirect costs and excludes direct material and direct labor which are also major components of product cost.

The Three Components of Product Cost Include