Which of the following is a period cost
The key difference between product cost and period cost is that product concurs when a company produces any products. Therefore, such costs are apportioned to a product. On the other hand, period costs incur with time. Consequently, they are not apportioned to any product but charged as an expense in the income statement. Show
In business, the cost is a significant concern, and it is mainly associated with the production of revenue. It is often crucial to a company’s competence to improve its margins and market share in the long run. Different business costs are variable, fixed, period, or product costs. Table of contents
What is Product Cost?As the name suggests, product costs are derived from producing major types of products by the business. Product cost is only incurred when some product is acquired or produced. If there is no production of any goods, the business will incur no product cost. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked What does Period Cost Mean?Period cost refers to the passage of time incurred by the businesses even if there is no production of goods or inventory purchase. Therefore, a period costPeriod CostPeriod cost refers to all those costs which are not related or tied with the production process of the company i.e., they are not assigned with any of the particular product of the company and are thus shown in the financial statement of the company for the accounting period in which they are incurred.read more is generally recorded in the books of accounts with inventory assets. Period Cost vs. Product Cost InfographicsLet’s see the top differences between period cost and product cost. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked Key DifferencesThe key differences are as follows –
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked Period vs. Product Cost Comparative TablePeriod CostProduct CostPeriod costs are not apportioned as they cannot be assigned to any products but are charged as an expense.The product cost is apportioned to the products as they are directly related to the production of goods and services.The basis of this cost is time.The basis of this cost is volume.The cost comprises office and administrative costs, selling and distribution cost, etc.The cost comprises manufacturing or production cost.Period cost is not a part of the cost of production.The product cost is often a part of the cost of production.A period cost is generally fixed like salaries, rent and is revised yearly.Product cost is generally variable as it depends on the production of goods.Examples of period costs are audit fees, sales fees, rent of the office building, etc.Examples of product cost are raw material, direct labor, factory rent, inventory, etc.ConclusionSeparating the costs into various categories is often very important and, at times, useful to analyze the company’s significant cost driversCost DriversA cost driver is a unit that derives the expenses and sets a basis on which a particular cost is to be allocated between the different departments and on the basis of that driver’s activity completed in that particular period the cost is allocated. These are the structural determinants of the activities on which cost is being incurred and determine the behavior of the costs on an activity.read more. In addition, cost analysis is critical to examine the position of the business and the amount of revenue it needs to generate to achieve economies of scale. Business often segregates these costs based on fixed, variable, direct, or indirect. Each company should ponder upon the various expenses they incur over the period, making the business more self-reliant and cost-efficient. Recommended ArticlesThis article is a guide to the Period Cost vs. Product Cost. Here we discuss the top differences between them and infographics and a comparison table. You may also have a look at the following articles – What are examples of period costs?In managerial and cost accounting, period costs refer to costs that are not tied to or related to the production of inventory. Examples include selling, general and administrative (SG&A) expenses, marketing expenses, CEO salary, and rent expense relating to a corporate office.
Which of the following costs is a period costs?Selling expenses such as sales salaries, sales commissions, and delivery expense, and general and administrative expenses such as office salaries, and depreciation on office equipment, are all considered period costs.
What is a period cost quizlet?Period costs are all costs that are not product costs. Period costs are not included as part of the cost of either purchased or manufactured goods; instead, period costs are expensed on the income statement in the period in which they are incurred. All selling and administrative costs are considered to be period costs.
Which one is an example of period cost Mcq?Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities.
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