The costs of materials and labor that do NOT enter directly into the finished product are classified as cost of goods sold.

Question

Quizplus · Accepted Answer

Costs of materials and labor that do not enter directly into the finished product are classified as indirect costs or overhead costs, and are not included in the cost of goods sold. Examples of indirect costs include rent, utilities, salaries of administrative staff, and depreciation of equipment.

The Costs of Materials and Labor That Do NOT Enter