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Which of the following is not a product cost? Direct materials costs Selling costs Direct labor...

Which of the following is not a product cost? Direct materials costs Selling costs Direct labor costs Factory overhead costs

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Answer #1
  • Concept

Variable Costing:

Product Cost under Variable costing includes direct material cost, direct labor cost, and variable manufacturing overhead only.

Fixed manufacturing overhead do not form part of the Product cost.

Absorption Costing:

Product Cost under Absorption costing includes direct material cost, direct labor cost, variable manufacturing overhead AND fixed manufacturing overheads.

>Selling, General and administrative expenses (BOTH Variable and Fixed) DO NOT FORM part of product cost.

Product Cost

Absorption Costing

Variable Costing

Direct material

Direct material

Direct Labor

Direct Labor

Variable manufacturing overhead

Variable manufacturing overhead

Fixed manufacturing overhead applied

-

  • Correct Answer = Option #2
    Selling Cost is not a Product Cost.
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