Question

Identify the following expenses that are period costs:    Select all that apply.

Group of answer choices

Accounting software license

Sales staff incentive payments

Depreciation of the administration building

Production supervisor salary

Direct labor overtime premiums

Answer 1

Answer is

· Accounting software licence

· Sales staff incentive payments

· Depreciation of the administrative buildings

Period costs are the costs which are charged to the period in which they are incurred. These costs are not used for inventory valuation purpose. They are charged as operating expenses of running the business. All selling and administrative expenses are period cost. Manufacturing costs are part of product cost. Hence production supervisor salary and direct labor overtime premium which is part of manufacturing overheads is treated as product cost .