Question

Which of the following costs are treated as product costs by a merchandising company​, such as​ Walmart? Which costs are treated as period​ costs?

  is it product cost or period costs?

1Cost of leasing the retail locations

  2Cost of​ manager's and sales​ associates' salaries

  3Cost of merchandise purchased for resale

  4Cost of designing and operating the​ company's website

  5Cost of shipping merchandise to the store

 6 Cost of providing free shipping to customers who buy product online

  7Cost of utilities used in running the retail locations

8Cost of import duties paid on merchandise purchased from overseas suppliers

  9Depreciation on store shelving and shopping carts

Answer 1

Solution:

1. Cost of leasing the retail locations - Period cost

2. Cost of​ manager's and sales​ associates' salaries - Period cost

3. Cost of designing and operating the​ company's website - Period cost

4. Cost of shipping merchandise to the store - Product cost

5. Cost of providing free shipping to customers who buy product online - Period cost

6. Cost of utilities used in running the retail locations - Period cost

7. Cost of import duties paid on merchandise purchased from overseas suppliers - Product cost

8. Depreciation on store shelving and shopping carts - Period cost