Question

Describe how Product Costs differ from Period Costs. Give examples of each cost.

Answer 1

Product Costs	Period Costs
Product costs are those costs necessary in making products and are part of manufacturing process.	Period costs are not necessary part of manufacturing process.
They are expensed in the financial statements when revenue from sale of products is realised	They are expensed in the period in which they are incurred.
Example of Product costs are Raw Material , Labour and Factory overhead such Factory Depreciation, fuel Etc	Example of Period Costs are Advertising, Sales Commissions, Office Supplies