Which of the following is not a product cost?

Question

Which of the following is not a product cost?

BlackTom AI · Accepted Answer

To determine which item is not a product cost, we first recall what constitutes product costs: direct materials, direct labor, and manufacturing overhead, all of which are incurred to manufacture the product.
Option 1: Property tax on the factory building. This is part of manufacturing overhead, allocated to products, so it is a product cost.
Option 2: Factory workers' salaries. Wages paid to employees directly involved in production fall under direct labor, a classic product cost.
Option 3: Indirect materials used in production. These are part of manufacturing overhead (indirect costs such as supplies used in the plant), and are included in product costs.
Option 4: Advertising costs for the product. Advertising is a selling and administrative expense and is not tied to the manufacturing process; it is a period cost, not a product cost.
Therefore, the item that is not a product cost is the advertising costs for the product, since they do not get inventoried as part of the product costs and are expensed in the period incurred.

Which of the following is not a product cost?

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