Depreciation on factory equipment is an example of a_____.
a. product cost
b. prime cost
c. period cost
d. selling cost
Depreciation is perid cost. Depreciation refers to the allocation of cost of assets i.e. equipment, building, furniture etc. over its useful life. It results in the reduction of the value of asset.
Depreciation is charged over the useful life of the asset or equipment. Hence, it is called a period cost.
Answer is option c - period cost
Other options are wrong because-
product cost is a cost of manufacturing a product which includes both direct cost and overhead.
Prime cost refers to the direct cost involved manufacturing a product.
Selling cost refers to the cost involved in selling the product such sales staff salaries, advertisement etc.
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