Certified Management Accountant Practice Exam 2026 - Free CMA Practice Questions and Study Guide

Joint costs, or common costs, refer to costs that are incurred to produce multiple products simultaneously and cannot be directly traced to any single product. This often occurs in processes where products share the same inputs or production phases.

The correct choice identifies that joint costs typically encompass direct materials, direct labor, and manufacturing overhead. These elements represent the essential costs involved in producing goods: direct materials are the raw materials used in production, direct labor refers to the labor directly attributed to creating the products, and manufacturing overhead includes all costs related to production that are not directly linked to specific units of product – such as utilities, rent for production facilities, and indirect materials.

In contrast, focusing solely on fixed costs would exclude crucial variable costs incurred in production, making it an incomplete perspective on joint costs. Solely considering variable costs neglects the fixed components of manufacturing that are essential to overall production. Marketing expenditures are typically not categorized under joint costs as they relate to selling and distribution rather than production processes.

Thus, the selection that includes direct materials, direct labor, and manufacturing overhead accurately captures the essence of joint costs, as it accounts for all necessary expenditures involved in producing shared products.