What is not considered a product cost?

Product costs are expenses that are directly tied to the production of goods and are necessary for getting the inventory ready for sale. These typically include direct materials, direct labor, and overhead costs associated with the manufacturing process.

Marketing costs, however, are categorized as period costs, which are expenses not directly tied to the production of goods. They are incurred to promote and sell the product rather than to manufacture it. Therefore, marketing costs related to stock do not qualify as product costs. In contrast, direct costs associated with stock, transportation costs, and storage costs are all necessary to prepare the stock for sale and thus are included in product costs.

Understanding the distinction between product costs and period costs is fundamental in accounting, as it affects how expenses are reported on financial statements and can impact gross profit calculations and inventory valuation.