The correct statement is:

Question

Quizplus · Accepted Answer

Product costs, which include direct materials, direct labor, and manufacturing overhead, are included in inventory until the product is sold. Once sold, the costs are recognized as expenses in the period in which the sale occurs. This is known as cost of goods sold. Manufacturing overhead costs are considered to be product costs, not period costs. GST (or any sales tax) is typically part of the selling price and is therefore included in the cost of goods sold, not treated as a separate period cost. For a retailer, some costs, such as the cost of the merchandise sold, are product costs, while other costs, such as rent and salaries, are period costs.

The Correct Statement Is