Unit cost figures typically refer to

Unit cost figures typically refer to

• A. Product costs only
• B. Product and period costs
• C. Period costs only
• D. Nonmanufacturing costs

Answer: (A)

Unit cost figures reflect the cost to produce a unit and are composed of manufacturing costs only—direct materials, direct labor, and manufacturing overhead applied to production. These costs are inventoried as part of the product cost and become COGS when the product is sold. Period costs, such as selling and administrative expenses, are expensed in the period incurred and do not attach to individual units. Nonmanufacturing costs are similarly excluded from unit cost. So the unit cost figure is driven by product costs only.

Unit cost figures reflect the cost to produce a unit and are composed of manufacturing costs only—direct materials, direct labor, and manufacturing overhead applied to production. These costs are inventoried as part of the product cost and become COGS when the product is sold. Period costs, such as selling and administrative expenses, are expensed in the period incurred and do not attach to individual units. Nonmanufacturing costs are similarly excluded from unit cost. So the unit cost figure is driven by product costs only.