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Product costs vs. period costs

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Distinguish between product costs and period costs as they relate to inventory. Please give examples of both. In what type of business would we find product costs?

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Solution Summary

This solution differentiates product costs and period costs as they relate to inventory. It also gives examples of businesses where these types of costs are commonly found.

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Product costs refer to costs that are involved in the production of a good or service. Product costs are common in manufacturing industry. In manufacturing industry, product costs include costs such as direct labor, direct material cost, and manufacturing overhead. Accountants view product cost as costs that attach to a unit of the good as raw materials ...

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Edwin Sinclar, MBA
Education
  • MBA, Aspen University
  • Bachelor of Science , Berea College
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