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

Question

Quizplus · Accepted Answer

Product costs are those costs incurred in the manufacturing process such as direct materials, direct labor, and factory overhead. Period costs are those costs not directly related to production, such as selling, general, and administrative expenses.

Factory rent is a product cost because it is directly related to the manufacturing process. Advertising expense is a period cost because it is not directly related to the manufacturing process, but rather to promoting and selling the product. Therefore, option C is the correct choice.

Which of the Following Statements Is True Regarding Product and Period