The Sunshine Company's manufacturing costs for the third quarter of 2015 were as follows: Direct materials and direct labor $600,000 Other variable manufacturing costs 100,000 Depreciation of factory building and manufacturing equipment 50,000 Sales Commissions 20,000 What amount should be considered product costs for external reporting purposes

Product costs are those costs that are incurred during production process, that is process of forming the product. It includes direct and indirect cost incurred during manufacturing.

Sales commission not however not considered part of product cost, but as part of operations expense. Commissions are paid to employees as incentive for driving sales, so it does not contribute to the product cost.

Product cost = Direct materials and direct labour+ Variable manufacturing costs+ Depreciation

Product cost = 600,000+ 100,000+ 50,000

Product cost= $750,000