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  1. Product costing is the process of calculating the comprehensive expenses associated with creating or acquiring a product, including direct costs like raw materials and labor, as well as indirect costs such as overhead and administrative expenses.
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    The formula for product cost can be derived by adding direct material cost, direct labor cost and manufacturing overhead cost. Mathematically, it is represented as, Product Cost = Direct Material Cost + Direct Labor Cost + Manufacturing Overhead Cost
    Product cost is generally variable as it depends on the production of goods. Examples of period costs are audit fees, sales fees, rent of the office building, etc. Examples of product cost are raw material, direct labor, factory rent, inventory, etc.
    The product costs incurred to produce units that were sold in the current period are first capitalized. But when they are sold, the costs are reported on the income statement as cost of goods sold. Expenses incurred to sell the finished inventory, on the other hand, are not considered product costs.
    A product cost is an expense capitalized as inventory when it gets incurred to manufacture a product. In other words, these costs are required to make a finished good and are capitalized on the balance sheet since they will benefit the company in the future. What is Product Cost?
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    WEBJan 27, 2023 · Learn how to use product costing to track the total manufacturing costs for any given product. Find out the factors to include, the steps to calculate, and the problems with this method of …

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