Question

Which of the following would be considered a nonmanufacturing (period) cost? a. The cost of an...

Which of the following would be considered a nonmanufacturing (period) cost?

a.

The cost of an advertising campaign to launch a new product.

b.

The hourly wages of the workers who make the product.

c.

The cost of materials used to make the product.

d.

The utilities cost for the factory where the product is made.

.

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Answer #1

Correct choice A

Advertising expenses are not directly or indirectly related to manufacturing costs and hence are classified as period costs. Period costs include administrative and selling expense

Option B is incorrect since hourly wages are directly related to manufacturing

Option C is incorrect since direct materials form part of manufacturing cost

Option D is incorrect since utilities cost are added to factory overheads and are related to product cost

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