Period costs

Why are non manufacturing costs called period costs? In my understanding, period costs are those which pertain to a specific period.

Aman Mahajan

Aman Mahajan

CA Inter


10-Jan-21 12:44


Answers (1)

The costs which are attributable to production are called product cost and they are added to cost of inventory. Costs which are not product costs are expensed in the period in which they are incurred/ or in which benefit is derived - these are period costs. For e.g Advtertisement expense - these are period costs.

Suraj Lakhotia

Suraj Lakhotia


11-Jan-21 09:16