Module 02 Discussion 1 - Period vs. Product Costs

Give an example of a period cost. How does this differ from a product cost?

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Examples of period costs include items such as rent, office supplies, utilities and advertising expenses. These types of costs are not included in the cost of goods sold.

A manufactures product costs are the direct costs to include overhead costs in manufacturing a product (Averkamp, H., 2017). Product costs are the necessary costs to produce a product. Examples of product costs include, direct labor, materials, consumable supplies and overhead.

Period costs are not necessary to producing a product and therefore cannot be assigned to the cost of production or cost of inventory. Instead they are the costs associated with selling the product or the general administration of a business. Usually period costs are expenses that cannot produce a return.