Is engineering cost considered a production cost?

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  • February 21, 2014 at 12:03 am #183829
    Anonymous
    Inactive

    I had a question give me a data table with items related to engineering cost, batch totals, cost per batch and such for product A and B

    The question asked to find the engineering cost per unit.

    The answers consisted of:

    A B

    A. Yes, No

    B. No. No

    C. Yes, Yes

    D No, Yes

    I was all kinds of confused to say the least. The answer was B. No, No. I’m assuming that engineering cost is not considered product cost. Or is this question a super glitch? Also this is from the BEC Wiley 2014 test bank for cost measurement & assignment.

    Thank you in advanced!

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  • February 21, 2014 at 12:15 am #516944
    musicamor
    Member

    It would be helpful if you could post the exact question so that we can see the fact pattern. On the surface, it appears as to though the examiners were testing your knowledge of product vs. period costs. Engineering costs are not product costs, i.e., inventoriable because they are not part of the manufacture of the good – at most they are indirect, fixed costs which would be charged to the P&L in the period incurred.

    Texas CPA - licensed in 2012!!!

    February 21, 2014 at 12:15 am #516979
    musicamor
    Member

    It would be helpful if you could post the exact question so that we can see the fact pattern. On the surface, it appears as to though the examiners were testing your knowledge of product vs. period costs. Engineering costs are not product costs, i.e., inventoriable because they are not part of the manufacture of the good – at most they are indirect, fixed costs which would be charged to the P&L in the period incurred.

    Texas CPA - licensed in 2012!!!

    February 21, 2014 at 12:39 am #516946
    Anonymous
    Inactive

    Now that makes sense. I believe so. Thank you for the clarification. I'm not very good with computers in terms of posting on a forum.

    I was just so baffled by how they ask for a calculation and the answers did not represent such. Trick question to the max for me.

    February 21, 2014 at 12:39 am #516981
    Anonymous
    Inactive

    Now that makes sense. I believe so. Thank you for the clarification. I'm not very good with computers in terms of posting on a forum.

    I was just so baffled by how they ask for a calculation and the answers did not represent such. Trick question to the max for me.

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