Which of the following costs should not be included in product costs for internal management reports that are used for decision-making? a) costs of unit-level activities. b) costs of batch-level activities. c) costs of product-level activities. d) costs of organization-sustaining activities.

D. Costs of Organisation Sustaining activities

Explanation:

Product costs simply represents costs that relevant or incurrred during the creation of a product and specifically these costs include apportioned factory overhead, direct materials, direct labour and direct production supplies.

One simple way of understanding product costs is that it represents those costs incurred that can be apportioned or traced to specific production processes at: the unit level, batch level or the product level of production activities.

Cost of Organization-sustaining activities is not a part of these product specific costs because they represent activity costs that benefits an entire organisation but cannot be traced to any specific production process or activity. Example of this cost includes the cost of Corporate Social Responsibility to a particular community or the cost of financial statements preparation. As such these costs must not be included in preparing product costs fo internal management reports.