Question

09/2020] ACCT2460 - Section 02 courses / Conestoga 09/2020] ACCT2460 - Section 02 / Chapter 1: An Overview of Mar Which of the following statements is true? Select one: o a. Product costs include costs in distributing the product O b. Period costs always include some costs in the manufacturing phase O c. Period costs are not related to production activities d. Product costs include the interest earned on short-term investments page

Answer 1

Answer: c. Period costs are not related to production activities.

period costs refer to costs that are not related to the production of inventory. Examples include selling, general and administrative expense, marketing expenses, CEO salary, and rent expense relating to the corporate office. The costs are not related to the production of inventory and are therefore expensed in the period incurred. In short, all costs that are not involved in the production of a product (product costs) are period costs.

Product costs are costs that are incurred to create a product that is intended for sale to customers. Product costs include direct material (DM), direct labor (DL), and manufacturing overhead (MOH).