apter 14: Managerial Accounting Concepts and Principles efine product and period
ID: 2398728 • Letter: A
Question
apter 14: Managerial Accounting Concepts and Principles efine product and period costs and explain how they impact financial statements. nowledge Check 02 ag and drop the correct term with its proper definition. These include selling and general administrative expenses. Product Costs drop item here Classification of costs as direct or indirect. Period Costs drop item here Classification of costs as variable or fixed. Behavior drop item hore These include direct materials, direct labor and indirect manufacturing costs called overhead costs. Traceability drop iRons IsoreExplanation / Answer
Solution 1:
Product cost are the cost that is related to production and acquisiton of product. Product costs are only incurred if products are acquired or produced. Examples of product costs are direct materials, direct labor, and allocated factory overhead.
Period costs are associated with the passage of time. Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities.
Thus, a entity that has no production or inventory purchasing activities will incur no product costs, but will still incur period costs.
Solution 2:
Product Costs - These include direct material, direct labor and indirect manufacturing cost called overhead costs.
Period Costs - These include selling and general administrative expenses.
Behaviour - Classification of costs as variable or fixed.
Traceability - Classfication of costs as direct or indirect.
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