Question 12 Which of the following is not an example of a pr

Question 12

Which of the following is not an example of a product cost?

Salary of manufacturing supervisor

Power for equipment

Depreciation on company-owned sales outlets

Depreciation on company-owned manufacturing plant

Solution

Answer:

Option 4 i.e. Depreciation on Company-owned Sales outlets.

Product Cost are the cost which are incurred to create a product such as Cost of Direct Materials, Direct Labor, Factory Overhead. Factory Overhead are the cost which are during the manufacturing process to bring up the product in the product facility such as Depreciation on Equipment, Power Expense, Indirect Labor, Factory Supervisors Salary etc.

Depreciation on Company-owned Sales outlet is cost incurred to sell the product and it is not the cost incurred to brought up the product.