Asked by Shanelle States on May 08, 2024
Verified
Which of the following costs of a manufactured product is a period cost?
A) Direct material
B) Manufacturing overhead
C) Indirect material
D) Sales commission
Period Cost
Expenses that are not tied to the production process and are therefore expensed in the period they are incurred, such as selling and administrative expenses.
Direct Material
Raw materials that can be directly traced to the manufacturing of a product and are significant in cost.
Manufacturing Overhead
Consists of all indirect costs associated with the production process, including utilities, depreciation on equipment, and salaries of maintenance staff.
- Differentiate between product and period costs in the context of manufacturing and non-manufacturing expenses.
Verified Answer
MC
Megan ClabbyMay 14, 2024
Final Answer :
D
Explanation :
Sales commission is a period cost, because it is not directly tied to the production of a specific unit of product. Instead, it is a selling expense that is incurred to generate revenue in a particular period. Direct material, manufacturing overhead, and indirect material are all examples of product costs that are incurred during the production process.
Learning Objectives
- Differentiate between product and period costs in the context of manufacturing and non-manufacturing expenses.