Question

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.

Answer 1

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

Step-by-step 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.