Asked by Franchezka Mendoza on Jun 11, 2024
Verified
Product costs are not expensed until the product is sold.
Product Costs
The total costs involved in manufacturing a product, which include direct materials, direct labor, and manufacturing overhead.
Expensed
A term referring to costs that are immediately charged against revenues as an expense, rather than being capitalized.
- Recognize the definitions of product costs and period costs, and their implications on financial statements.
Verified Answer
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Aaliyah DavisJun 15, 2024
Final Answer :
True
Explanation :
Product costs, which include direct materials, direct labor, and manufacturing overhead, are capitalized as inventory until the product is sold. Once the product is sold, the costs are expensed as Cost of Goods Sold (COGS) in the income statement.
Learning Objectives
- Recognize the definitions of product costs and period costs, and their implications on financial statements.