Product costs are costs that can be divided according to production units and be a part of per unit product costs.
What are Product costs?
- The summation of all the indirect costs incurred while producing a product is called as manufacturing overhead cost.
Fixed manufacturing costs should be treated as product costs because:
- According to Absorption costing, some of these costs can be diversified as per product, or the sum of all the costs can be divided by the total number of units produced.
- The advantage of assigning it to the product is that helps to design the prices efficiently.
- It can also help in deciding the quantity to be produced without hampering the quality.
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