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Chapter 16: Q1CA (page 906)

In 100 words or fewer, explain the difference between product costs and period costs. In your explanation, explain the inventory accounts of a manufacturer.

Short Answer

Expert verified

Period cost are the operating expenses and the products costs are which incurred for manufacturing the product.

Step by step solution

01

Step-by-Step SolutionStep 1: Definition of Manufacturing company

The manufacturing company is defined as the company which convert raw material into finished goods using labor, machinery and supplies.

02

Difference between product costs and period costs

Period costs are operating costs which are expensed in the same accounting period in which they are incurred, on the other hand, the product costs are recorded as an asset and not expensed until the goods sold, then they are recorded as the expense known as cost of goods sold.

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Most popular questions from this chapter

This is the first problem in a sequence of problems for Piedmont Computer Company, a manufacturer of personal computers and tablets. During its first month of manufacturing, Piedmont Computer Company incurred the following manufacturing costs:

Balances: Beginning Ending

Direct Materials \( 10,500 \) 9,700

Work-in-Process Inventory 0 17,000

Finished Goods Inventory 0 31,000

Other information:

Direct materials purchases $ 16,000

Plant janitorial services 500

Sales salaries expense 10,000

Delivery expense 1,600

Sales revenue 1,100,000

Utilities for plant 16,000

Rent on plant 9,000

Customer service hotline costs 19,000

Direct labor 210,000

Prepare a schedule of cost of goods manufactured for Piedmont Computer Company for the month ended January 31, 2020.

List six differences between financial accounting and managerial accounting.

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost.

9. Sugar and flour used to make cookies

What are product costs?

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

h. Cost to purchase wood pulp.
See all solutions

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