Product costs

Product costs. The costs incurred by manufacturers to produce their products or incurred by merchandisers to purchase their products. For external financial reporting, GAAP requires that these costs be assigned to inventory until the products are sold, at which point, they are expensed as Cost of Goods Sold.

Definitions

According to Managerial Accounting by Braun, Tietz (5th edition),

Product costs. The costs incurred by manufacturers to produce their products or incurred by merchandisers to purchase their products. For external financial reporting, GAAP requires that these costs be assigned to inventory until the products are sold, at which point, they are expensed as Cost of Goods Sold.