filmov
tv
Product vs. Period Cost
Показать описание
Manufacturers, retailers, and any company with inventory must distinguish between product costs and period costs. The difference between product costs and period costs has to do with the timing (when the cost is expensed).
A product cost is assigned to inventory, and is expensed when the product is sold through Cost of Goods Sold. For a manufacturer, product costs include all manufacturing costs: direct materials, direct labor, and manufacturing overhead. These costs first become an asset (inventory) and are expensed when the asset is sold.
A period cost is any cost that is not a product cost. Period costs are expensed when they are incurred. Selling, general, and administrative expenses are an example of a period cost. If a manufacturer pays a sales commission to one of its sales staff, this cost is expensed and does not attach to inventory.—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
—
SUPPORT EDSPIRA ON PATREON
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
—
LISTEN TO THE SCHEME PODCAST
—
GET TAX TIPS ON TIKTOK
—
ACCESS INDEX OF VIDEOS
—
CONNECT WITH EDSPIRA
—
CONNECT WITH MICHAEL
—
ABOUT EDSPIRA AND ITS CREATOR
A product cost is assigned to inventory, and is expensed when the product is sold through Cost of Goods Sold. For a manufacturer, product costs include all manufacturing costs: direct materials, direct labor, and manufacturing overhead. These costs first become an asset (inventory) and are expensed when the asset is sold.
A period cost is any cost that is not a product cost. Period costs are expensed when they are incurred. Selling, general, and administrative expenses are an example of a period cost. If a manufacturer pays a sales commission to one of its sales staff, this cost is expensed and does not attach to inventory.—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
—
SUPPORT EDSPIRA ON PATREON
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
—
LISTEN TO THE SCHEME PODCAST
—
GET TAX TIPS ON TIKTOK
—
ACCESS INDEX OF VIDEOS
—
CONNECT WITH EDSPIRA
—
CONNECT WITH MICHAEL
—
ABOUT EDSPIRA AND ITS CREATOR
Комментарии