Depreciation on manufacturing equipment is a period cost

Question

Quizplus · Accepted Answer

Depreciation on manufacturing equipment is a product cost that is included in the cost of the product being manufactured. Product costs are costs that are directly tied to the production of goods or services, such as direct materials, direct labor, and manufacturing overhead. Period costs, on the other hand, are costs that are not tied to the production of goods or services, but rather support the overall operation of the business over a period of time, such as salaries, rent, and advertising expenses. Examples of period costs include administrative expenses, selling expenses, and research and development costs.

Depreciation on Manufacturing Equipment Is a Period Cost