Question

Which of the following is an example of a period cost in a company that makes...

Which of the following is an example of a period cost in a company that makes clothing?

a. Monthly depreciation on production equipment

b. Fabric used to produce men's pants

c. Advertising cost for a new line of clothing

d. Factory supervisor's salary

Business   Accounting   
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Answer #1

Answer- Option C

Explanation - Period costs are those costs that are not included in the production of goods. Period costs are related to the business administration in a accounting period.

Advertising is related to the marketing purpose to increase sales and revenues but not related to the production of the goods so it’s a period cost.

So option a, b and d are not period costs.

As depreciation and fabric are related to the manufacturing of the product. Salary is also related to the production of the product because if we pay the supervisor then only the supervisor will work .

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