Multiple Choice
Which of the following best describes accounting?
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1. Introduction to Accounting
Types of Accounting
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Which of the following would NOT be considered a product cost?
A
Depreciation on manufacturing equipment
B
Advertising expense
C
Factory supervisor's salary
D
Direct materials used in production
Verified step by step guidance1
Understand the concept of product costs: Product costs are costs that are directly associated with the production of goods. These include direct materials, direct labor, and manufacturing overhead.
Review the options provided: Depreciation on manufacturing equipment, advertising expense, factory supervisor's salary, and direct materials used in production.
Classify each option: Depreciation on manufacturing equipment and factory supervisor's salary are part of manufacturing overhead, which is a product cost. Direct materials used in production are also a product cost as they are directly involved in creating the product.
Identify advertising expense: Advertising expense is a period cost, not a product cost. Period costs are expenses that are not directly tied to production and are incurred during a specific time period, such as selling and administrative expenses.
Conclude that advertising expense is the correct answer because it does not fall under the category of product costs.
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