The following are true regarding product costs except
A) product costs are found on the balance sheet until they are sold.
B) product costs consist of direct labor, direct materials, and factory overhead.
C) product costs can be found in three accounts in the balance sheet.
D) product costs include sales and administrative expenses.

Question

Quizplus · Accepted Answer

Product costs do not include sales and administrative expenses, which are considered period costs and are expensed on the income statement in the period in which they are incurred. Product costs consist of direct labor, direct materials, and factory overhead, and they are found on the balance sheet until the products are sold. They can be found in three accounts on the balance sheet: raw materials inventory, work in process inventory, and finished goods inventory.

The Following Are True Regarding Product Costs Except