Which of the following is included in a unit product cost?

• A. Only direct materials and direct labor
• B. Interest expense and income tax expense
• C. Selling expenses and administrative expenses
• D. Direct materials, direct labor, and manufacturing overhead

Answer: (D)

Verified step by step guidance

1. Understand the concept of unit product cost: Unit product cost refers to the total cost incurred to produce a single unit of a product. It includes all costs directly associated with manufacturing the product.
2. Identify the components of unit product cost: These components typically include direct materials, direct labor, and manufacturing overhead. Direct materials are the raw materials used in production, direct labor refers to the wages paid to workers directly involved in manufacturing, and manufacturing overhead includes indirect costs such as factory utilities and depreciation of equipment.
3. Exclude non-manufacturing costs: Selling expenses, administrative expenses, interest expense, and income tax expense are not included in unit product cost because they are not directly related to the production process. These are classified as period costs and are expensed in the period incurred.
4. Relate the components to the production process: Direct materials and direct labor are tangible and directly traceable to the product, while manufacturing overhead represents indirect costs that support the production process but cannot be directly traced to a specific unit.
5. Summarize the correct answer: The unit product cost includes direct materials, direct labor, and manufacturing overhead, as these are the costs directly tied to the production of a product.