Question

Explain the difference between product costs and period costs as they relate to the income statement....

Explain the difference between product costs and period costs as they relate to the income statement. Are these terms synonymous with short-run and long -run?

Homework Answers

Answer #1

Product costs are those that are necessary to manufacture the product. It includes, direct material, direct labor and manufacturing overhead. They are added to the cost of the product; that is they are inventoriable.

In contrast, period costs are those that are unrelated to manufacture. They are not in any way related to manufacture. Examples are advertising costs, selling costs, administrative costs and so on.

No, they are not synonymous with short run and long run. For instance, product costs like R&D expense, patent amortization, depreciation are long run. Period costs can be short run also, like advertisement done for a product launch.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain the difference between costs in the short run and long run
Explain the difference between costs in the short run and long run
What is the difference between period and product costs ?
What is the difference between period and product costs ?
2. This question deals with the costs a hospital faces. a. What is the difference between...
2. This question deals with the costs a hospital faces. a. What is the difference between short run costs and long run costs? b. Give an example of a cost that is fixed in the short run and one that is variable in the short run for a hospital.
Explain the difference between the “short run” and the “long run”. Be specific.
Explain the difference between the “short run” and the “long run”. Be specific.
1.  What is the difference between the short run and the long run? Explain the        Law of...
1.  What is the difference between the short run and the long run? Explain the        Law of Diminishing Marginal returns. 2.  Discuss the difference between the market demand curve of a purely      competitive industry and the demand curve confronted by an individual      firm in pure competition. 3.  What is a monopolist, and what is required for a monopolist to earn profits      in the long run? 4.  What does the demand curve facing a monopoly look like?Why? 5.  What is the Law of Diminishing Marginal Utility...
1.what is the difference between a period and a product cost? 2.What is the difference between...
1.what is the difference between a period and a product cost? 2.What is the difference between a fixed cost and a variable cost? 3.What is the definition of the relevant range? 4.What are the 3 costs that are considered to be product costs? 5.How do fixed and variable costs behave within the relevant range? 6.How do we calculate the pre-determined over head rate? 7.What is the pre-determined rate used for ? 8.What is the difference between over and under applied?...
1.        Is the basic difference between the short run and the long run that the...
1.        Is the basic difference between the short run and the long run that the law of diminishing returns applies in the long run, but not in the short run? 2.        Draw a typical production function and explain its shape. Below that diagram, draw an average product schedule and marginal product schedule. Indicate the relationship between the two diagrams. ##3         Explain why the marginal product of labour initially increases as more workers are hired and then eventually...
Explain the difference between cyclical, frictional, and structural unemployment and how they relate to the natural...
Explain the difference between cyclical, frictional, and structural unemployment and how they relate to the natural rate of unemployment.
Direct Product Costs are charged against income in the time period A. That the product is...
Direct Product Costs are charged against income in the time period A. That the product is sold B. That the product is paid for C. That the product is purchased D. That the product is manufactured
Why is it important to distinguish between product and period costs?
Why is it important to distinguish between product and period costs?