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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

What is the difference between a product cost and a period cost?

To determine

Product costs:

Product costs are the costs which are incurred in the production of the goods. These costs include the direct materials cost, direct labor cost, and factory overhead cost.

Period costs:

Period costs are the costs other than the product costs. These costs are not incurred in manufacturing the goods. These costs include the administrative expenses, and selling expenses.

To determine: The major difference between a product cost and a period cost.

Explanation

The major difference between a product cost and a period cost is as follows:

  • In product costs there are three elements of manufacturing cost such as direct materials cost, direct labor cost, and factory overhead cost. Until a product is sold, all these costs are treated as assets...

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