Period costs are costs that are not absorbed directly into the products or services. Some typical examples of period costs are rent of the building that has to be paid irrespective of the level of production or sales. Salaries are another example of period costs that are paid irrespective of the level of activity.
Although the space used for production has a fixed rent attached to it but the rent has nothing to do with the level of units produced on the space. Similarly, the office furniture is not involved in the production process and hence the depreciation on office furniture is not a production cost and is a period cost.
: Refer to the data given in Exercise 3. Answer all
Suppose that you have been given a summer job as an intern
M. K. Gallant is president of Kranbrack Corporation, a
Distinguish between product costs and period costs as they relate to inventory
The telecom division of Kothari Inc. produces and sells 100,
Martinez Company’s relevant range of production is 7,500 units to
Explain why product costs are capitalized but period costs are expensed in
Are selling and administrative expenses treated as product costs or as period
The following calendar year-end information is taken from the December
Determine whether each of the following costs would be classified as product
