Period costs, Cost Accounting

Assignment Help:

Period Costs

Some terms are difficult to define. In one school of thought, period costs are the any costs that are not product costs. But, such a description is a stretch, because it fails to consider expenditures which will be of benefit for number of years, such as the cost of acquiring land, buildings, etc. It is the best to relate period costs to presently incurred expenditures which relate to SG&A activities. These costs do not logically link to inventory, and should be expensed in the time incurred.

It is fair to say that the product costs are inventorial manufacturing costs, and the period costs are the nonmanufacturing costs that should be expensed within the time incurred. This distinction is significant, as it paves the way for the relating to financial statements of the product producing the company. And, the relationship between these costs can diverge considerably based upon product produced. A soft drink manufacturer may spend very little on producing the product, but much on selling. On the other hand, a steel mill may have high inventory costs, but very low selling expenses. Managing a business will need you to be keenly aware of its cost its structure.

 

 


Related Discussions:- Period costs

High - low method of cost estimation, High - Low Method of Cost Estimation ...

High - Low Method of Cost Estimation Now, cost estimation is based upon the relationship between past level and past cost of activity. Variable cost is based on the relationsh

Accounting, Ask What is the major value of the weighted cost of capital cal...

Ask What is the major value of the weighted cost of capital calculation for the firm? question #Minimum 100 words accepted#

Determine difference between results using marginal costing, Determine Diff...

Determine Difference between Results Using Marginal Costing and Absorption Costing The overhead absorption rate for product X is Ksh.10 per machine hour. All unit of product X

Calculate the gross profit margin, Assets                                  ...

Assets                                               2011                                                                        2010 Non Current Assets

Co-ownership incentive scheme or profit sharing schemes, Co-ownership incen...

Co-ownership incentive scheme or Profit Sharing Schemes The organization permits for ownership whereby the employees are permitted to own a percentage of the shares in the fir

Direct material, Flying High Company manufactures model airplanes. During t...

Flying High Company manufactures model airplanes. During the month, it manufactured 10,000 airplanes. Each one used an average of 6.5 direct labor hours and an average of 1.5 sheet

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd