The product cost method includes all manufacturing costs plus selling and administrative expenses in the cost amount to which the markup is added to determine product price.

Product Cost Method

A cost-plus method of price setting in which only the costs of manufacturing the product are included in the cost amount to which the markup is added.

Selling Expenses

Expenses that are incurred directly in the selling of merchandise.

Administrative Expenses

Costs related to the general operation of a business, such as salaries of non-sales personnel, rent, office supplies, and utilities.