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New Member
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Sep 10, 2009, 10:16 AM
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What cost would be considered a period cost not a product cost.
Which of the following is a period cost and not a product cost?
A.Manufacturing equipment depreciation
B.propery taxes on headquarters
C.direct material cost
E. Sales commissions
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Uber Member
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Sep 11, 2009, 06:04 PM
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Product costs are direct material, direct labor and manufacturing overhead.
Period costs are selling and administrative costs.
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Senior Member
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Sep 11, 2009, 11:32 PM
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which of the following is a period cost and not a product cost?
A.Manufacturing equipment depreciation
Period cost since such costs will occur every period and are not affected by the changes in volume of production.
B.propery taxes on headquarters
Period cost - same as a above
C.direct material cost
Product cost (manufacturing)- it will change with the change in the volume of production
E. Sales commissions
Product cost (non manufacturing) - it will change with the change in volume of sales
Please remember that variable costs are considered as product costs. Some of the manufacturing overhead may be considered as product costs if they are variable but the fixed overheads are always period costs.
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Uber Member
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Sep 12, 2009, 06:48 PM
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Since you're always asking me for my sources, I'll ask you.
Where do you find that "period" cost means something that isn't affected by changes in production? That's known as a fixed cost.
Where do you find that sales commissions is a product cost? It's a selling expense.
You seem to be relating product and period as more to do with variable and fixed as opposed to what they're related to. The only way that could be true is if other locations do it differently than we do, and I've never seen evidence of that.
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Senior Member
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Sep 12, 2009, 11:00 PM
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Originally Posted by morgaine300
Since you're always asking me for my sources, I'll ask you.
Where do you find that "period" cost means something that isn't affected by changes in production? That's known as a fixed cost.
Where do you find that sales commissions is a product cost? It's a selling expense.
You seem to be relating product and period as more to do with variable and fixed as opposed to what they're related to. The only way that could be true is if other locations do it differently than we do, and I've never seen evidence of that.
Please refer to CIMA terminology. If you do not have it please let me know, I will mail it to you.
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Uber Member
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Sep 12, 2009, 11:34 PM
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I went to their website. The U.S. is not even listed.
So once again, we have a situation where neither of us know the correct answer because we don't know where the poster is from.
(I should check into requiring a country be listed if someone wants to post on forums where it could be relevant.)
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New Member
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Sep 23, 2012, 04:07 PM
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Answer is B, A is actually a manufacturing cost, thus a product cost. It relates to the manufacturing of the product
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Ultra Member
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Sep 23, 2012, 05:04 PM
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Having followed this discussion there is not a great deal of understanding of the maufacturing process
manufacturing costs include both fixed and variable costs and are costs that are related to the production of goods. Depending upon which system is used to determine product cost, these costs may or may not be included in product cost.
other costs such as selling, distribution, administration which are related to functions outside of the manufacturing process are not considered manufacturing costs
The answer to the specifc question above is B.
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