Asked by Jazmin Blanco Ferrufino on Jun 03, 2024
Verified
Which of the following is NOT a period cost?
A) Depreciation of factory maintenance equipment.
B) Salary of a clerk who handles customer billing.
C) Insurance on a company showroom where customers can view new products.
D) Cost of a seminar concerning tax law updates that was attended by the company's controller.
Depreciation
The process of allocating the cost of a tangible asset over its useful life.
Administrative Expense
Overhead or general expenses related to the day-to-day operations of a business but not directly tied to a specific project or product.
Period Cost
Costs that are expensed in the period in which they are incurred and are not directly tied to the production of inventory.
- Identify and tell apart product and period costs, along with their implications on financial statements.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
A
Explanation :
Period costs are not directly related to production and include expenses like selling and administrative expenses. Depreciation of factory maintenance equipment is a product cost as it is directly related to the production process.
Learning Objectives
- Identify and tell apart product and period costs, along with their implications on financial statements.