Depreciation on manufacturing equipment is an indirect product cost,while depreciation on office equipment is a period cost.

Question

Quizplus · Accepted Answer

Manufacturing equipment is directly involved in the production of goods, so its depreciation is considered an indirect product cost that will be included in the cost of goods sold. On the other hand, office equipment is not directly involved in the production process; it is used to support administrative activities and is considered a period cost that will be expensed in the period in which it is incurred.

Depreciation on Manufacturing Equipment Is an Indirect Product Cost,while Depreciation