There are at least three different purposes for which we measure product costs. They are 

(1) Product mix decisions, 

(2) Determining the appropriate charge for a government contract, and 

(3) Preparing financial statements for external reporting following GAAP. 

Required

In the following table, indicate whether the respective type of cost would be included or excluded for the particular purpose. If your answer is not definitive (include or exclude), provide a short explanation of why.

Transcribed Image Text:

Type of Cost Direct material Direct manufacturing labor Manufacturing overhead Distribution costs Product design costs R&D costs Customer service Purpose: Product Mix Purpose: Government Contract Purpose: Financial Statement (using GAAP)