Which one of the following costs is classified as a period cost? (CIA adapted)
A) The wages of the workers on the shipping docks who load completed products onto outgoing trucks.
B) The wages of a worker paid for idle time resulting from a machine breakdown in the molding department.
C) The payments for employee (fringe) benefits paid on behalf of the workers in the manufacturing plant.
D) The wages paid to workers for reworking defective products that failed the quality inspection upon completion.

Question

Quizplus · Accepted Answer

Period costs are not directly tied to the production process and are expensed in the period they are incurred. The wages of workers on the shipping docks are considered period costs because they are related to selling and distribution activities, not the manufacturing process itself.

Which One of the Following Costs Is Classified as a Period