Question

In: Accounting

Fresh Wreath Corporation manufactures wreaths according to customer specifications and ships them to customers using United...

Fresh Wreath Corporation manufactures wreaths according to customer specifications and ships them to customers using United Parcel Service (UPS). Which two terms below describe the cost of shipping these wreaths?

fixed cost and period cost

variable cost and product cost

fixed cost and product cost

variable cost and period cost

Solutions

Expert Solution

The cost of shipping these wreaths is variable cost and period cost.
A variable cost is one which changes in proportion to change in volume. Cost of shipping depends on volume and is a variable cost.
A period cost is one which is not related to production and is expensed in the period it is incurred. Cost of shipping is a selling cost.
Option D is correct

ekkarill92 answered 2 years ago
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