Final answer:
Indirect labor is classified as a product cost because it pertains to expenses that are necessary for the manufacturing process but are not directly traceable to specific units of production.
Step-by-step explanation:
The question concerns the classification of indirect labor within the cost accounting framework. Indirect labor is a cost associated with employees who do not directly work on a product but whose services are necessary for the manufacturing process. Examples include maintenance personnel, quality control inspectors, and supervisors. Unlike direct labor costs, which pertain to workers who actually produce products, indirect labor costs are not directly traceable to specific units of production.
Indirect labor is considered a product cost. It is included in the overhead component of product costs, which are capitalized as inventory on the balance sheet until the goods are sold, at which point they are expensed on the income statement as cost of goods sold. Thus, indirect labor costs are included in the value of the inventory and are recognized as expenses in the period in which the related products are sold.
Since indirect labor is a part of manufacturing overhead and a product cost, the correct option is (c) product cost.