Which of the following statements is true regarding product and period costs?
A)Office salaries expense and factory maintenance are both product costs.
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 and indirect labor are both period costs.

Question

Quizplus · Accepted Answer

Product costs are costs that are directly attributable to the production of a product and are included in the cost of goods sold. Examples of product costs include direct materials, direct labor, and factory overhead costs such as factory rent. Period costs, on the other hand, are non-manufacturing costs that are expensed when they are incurred. Examples of period costs include advertising expense, sales commissions, and indirect labor. Therefore, factory rent is a product cost and advertising expense is a period cost.

Which of the Following Statements Is True Regarding Product and Period