Which of the following statements is true regarding product and period costs?
A) Delivery expense is a product cost and indirect materials is a period cost.
B) Factory rent is a product cost and advertising expense is a period cost.
C) Office rent is a product cost and supervisors' salaries expense is a period cost.
D) Office salaries expense and factory maintenance are both product costs.
E) Sales commissions and indirect labor are both period costs.

Question

Quizplus · Accepted Answer

Product costs are those costs incurred in the production of goods, while period costs are those costs that are not related to the production of goods and are expensed in the period they are incurred. Factory rent is a product cost because it is directly related to the production of goods, while advertising expense is a period cost because it is not related to the production of goods but rather to the promotion of the business in general. Therefore, option B is the correct answer.

Which of the Following Statements Is True Regarding Product and Period