Question

Which of the following costs are charged directly to the income statement?



Multiple select question.

direct materials


direct labor


selling costs


administrative costs


manufacturing overhead

Answer 1

In general, the costs that are charged directly to the income statement are typically the costs that are associated with the operational aspects of a business, such as selling and administrative activities. Here's a breakdown of the costs you've listed:

1. **Direct Materials** - These are part of the cost of goods sold (COGS), which is not charged directly to the income statement as an expense until the products are sold.

2. **Direct Labor** - Similar to direct materials, direct labor costs are included in COGS and are charged to the income statement only when products are sold.

3. **Selling Costs** - These are expenses incurred to sell the products and are charged directly to the income statement.

4. **Administrative Costs** - These are the costs associated with running the business (excluding manufacturing and selling), and they are also charged directly to the income statement.

5. **Manufacturing Overhead** - Like direct materials and direct labor, manufacturing overhead is included in COGS and is charged to the income statement in the period when the goods produced are sold.

Therefore, the costs that are charged directly to the income statement from your list are:

- **Selling costs**
- **Administrative costs**