Which of the following would not be considered a product cost

Which of the following would not be considered a product cost? A. Direct material costs. B. Factory supervisors salary. C. Direct labor costs. D. Budget accountants salary E. Manufacturing overhead costs. Which of the following would not be considered a product cost? A. Direct material costs. B. Factory supervisor’s salary. C. Direct labor costs. D. Budget accountant’s salary E. Manufacturing overhead costs.

General guidance

Concepts and reason

Product Cost: It is the cost which is associated with the production of goods. If there is no production then there would be no product cost. The examples of product costs are direct material, direct labor, and factory overhead.

Fundamentals

Direct Materials: These are the materials which are used in the Production process which constitutes an integral portion of the final product, the cost of which is identifiable and traceable directly to it. The cost of direct material can be directly chargeable to the final product as compared to the indirect material.
Direct labor: Workers or employees directly involved in the manufacture of goods and services are called direct labor. Direct labor can be directly traceable to a specific product or cost center. In other words, the cost of the workers which is directly involved in the transformation of the raw material into the finished product.
Manufacturing Overhead Cost: This overhead comprises of all the indirect cost incurred at the time of manufacturing process of the products. This overhead is basically comprised of the units which were produced during the given time period.
Period Cost: It is the cost which is associated with the period of time. The period cost is incurred even when there is no production. The example of period cost is selling and administrative expenses.
Salary: It is the consideration which the employee received for its services which he provided to the employer. It is generally a fixed monthly payment based on the employment contract.

Step-by-step

Step 1 of 2

Direct material costs are those materials that are used in the production process. Hence, this is a product cost.
Factory supervisor’s salary is the salary of the supervisor who supervises the labor work. Hence, this would be a product cost.
Direct labor costs are the wage paid to the labors who are directly associated with the production process. Hence, this would be included in the product cost.
Manufacturing overhead costs comprise of all the indirect costs associated with the production process. Since it is related to the production process it would be included in the product cost.

The materials which are directly related and relevant to the production process is direct materials. These materials are the only one which is converted from the raw materials to finished goods. Hence, the direct material cost would be treated as product cost.
Factory supervisor’s salary is the salary which is paid in respect of that the person will supervise the labor that how the production is done and in which quantity as per the requirements. Therefore, it is related to the production process. Hence, it would be treated as a product cost.
Direct labor costs are the wages paid to the labor who are directly associated and responsible for the production of goods from raw materials to finished goods. This is also related to the production process. Hence, it would also be treated as product cost.
Manufacturing overhead costs comprise of all the indirect costs incurred at the time of production. This overhead includes the units only which are produced within the given time period of production. This cost is significant in the production process, hence it would be treated as product cost.

Use the information related to product cost to identify the correct option.

Step 2 of 2

Budget accountant’s salary is not related to the production process, therefore it would not be considered as product cost.

Budget accountant’s salary would not be considered a product cost.

The budget accountant’s salary is the person who has one of the key work to do that is to manage the annual budgets of their employers, comparing the budgets with the actual spending of the employer and keep them updated to stay within the defined limits and for doing this job the person charges that is the salary.
So, this salary has no relation and is not relevant to the manufacturing process. Hence, this would be treated as a period cost rather than the product cost.

Answer

Budget accountant’s salary would not be considered a product cost.

Answer only

Budget accountant’s salary would not be considered a product cost.

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