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3 April, 12:03

A product cost is:

a. an expense allocated by a systematic procedure.

b. recognized during the period in which a liability is incurred.

c. recognized in the period during which related revenue is recognized.

d. recognized in the period in which cash is spent.

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  1. 3 April, 15:00
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    c. recognized in the period during which related revenue is recognized.

    Explanation:

    The product cost is that cost which is directly related to the product. The formula to compute the product cost is shown below:

    = Direct materials used + Direct labor + manufacturing overhead

    It considers the direct material, direct labor, and manufacturing overhead. It is recognized in that year when the revenue is recognized. So, the correct option is c.
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