Christopher Nguyen 11:00 Chapter 2 Q1. What are the three major elements of product costs in a manufacturing company? The three major elements that make up product costs are direct materials, direct labor, and manufacturing overhead. Q3. Explain the difference between a product cost and a period cost. Period costs are all other costs that are not included in product costs such as selling and administrative expenses advertising, executive salaries, sales commissions, public relations, and other non-manufacturing costs. Q7. Why are product costs sometimes called inventoriable costs? Describe the flow of such costs in a manufacturing company from the point of incurrence until they finally become expenses on the income statement. Product costs are sometimes called inventoriable costs because some product costs are initially assigned to inventories. From cash direct materials flows from to raw materials, then to work in
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