Question

In: Accounting

explain the difference between a product cost and a period cost. provide atleast two examples of...

explain the difference between a product cost and a period cost. provide atleast two examples of each.

Solutions

Expert Solution

Product Cost:

Product cost is also called the Manufacturing cost of the product and it includes consumption of raw material for making the product, Direct Labor expenses required for processing the product and related factory overhead related to production.

Example: Direct Material, Direct Labor, Factory Overhead related to production

Period Cost:

Other than product cost are classified under period cost. Period cost are charged on the basis of periodically and these cost are mostly in fixed in nature but sometimes they are related to volume of sales also.

Example: Salary of administrative staff, Depreciation of office equipment’s, Salary of security agency, Advertising Expenses, Office Rent etc.


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