True or False: Sales staff labor is included in the cost of goods.

True or False: Sales staff labor is included in the cost of goods.

• A. True
• B. False
• C. Sometimes included
• D. Depends on the method

Answer: (B)

Sales staff labor is not included in the cost of goods. The amount considered as cost of goods sold reflects costs directly tied to producing the goods that were sold—raw materials, direct labor in production, and allocated manufacturing overhead. Selling activities, such as salaries of the sales team, advertising, and distribution, are operating expenses and appear separately as selling, general, and administrative expenses. They’re expensed in the period and do not become part of COGS, even when using common costing methods. Therefore, the statement is false.

Sales staff labor is not included in the cost of goods. The amount considered as cost of goods sold reflects costs directly tied to producing the goods that were sold—raw materials, direct labor in production, and allocated manufacturing overhead. Selling activities, such as salaries of the sales team, advertising, and distribution, are operating expenses and appear separately as selling, general, and administrative expenses. They’re expensed in the period and do not become part of COGS, even when using common costing methods. Therefore, the statement is false.