An example of a period cost is:?

Question

a. insurance on factory equipment
b. president's salary
c. property taxes on factory building.
d. wages of factory custodians.

(please explain)

Answer 1

An example of a period cost is:
b. president's salary.

Product costs are costs which add value to inventory. These costs are capitalized (added) to inventory, and later expensed as cost of goods sold when the goods are sold. (a), (c) and (d) are all product costs as they are all factory overheads.

Period costs are costs which are expensed immediately, such as office salaries and selling expenses, whether or not the goods are sold.

Answer 2

Period Cost Examples

Answer 3

Product cost is the cost that incurs in the production process and is not carried over to the income statement right away, rather is kept as part of the inventory asset. and in the end, when you sale the product the cost is posted in the Income statement as expense. Raw material cost is a product cost. the journal entry is as follows 1. when you buy raw materials Raw Materials Inventory DBT Cash (or accounts payable) CDT 2. when you use the raw material Work in process BDT Raw Material inventory CDT 3. When the production is finished Finished Goods Inventory DBT Work in process CDT 4. when you sell the product Cost of Goods Sold BDT Finished Goods Inventory CDT Accounts receivable/ Cash DBT Sales revenue CDT This Cost of Goods Sold is carried forward to the income statement as well as the sales revenue. On the other hand period cost is the kind of cost that is directly carried into the income statement as expenses. Administrative expenses is one of the very good examples of it. N.B for further clearance you may contact me.

Answer 4

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RE:
An example of a period cost is:?
a. insurance on factory equipment
b. president's salary
c. property taxes on factory building.
d. wages of factory custodians.

(please explain)