**Cost Classification Exercise: Product Cost vs. Period Cost****Instructions:**Identify whether each of the following costs is classified as a product cost or a period (selling and administrative) cost.| **Event** | **Cost Type** ||----------------------------------------------|----------------------------------|| a. Goods purchased for resale. | || b. Salaries of salespersons. | || c. Advertising costs. | || d. Transportation-out. | || e. Interest on a note payable. | || f. Salary of the company president. | || g. Transportation-in. | || h. Insurance on the office building. | || i. Office supplies. | |**Explanation:**Each event listed is a cost incurred by businesses. Your task is to determine if the cost aligns more with product operations or if it's associated with selling and administrative activities. Product costs are part of the manufacturing process, while period costs are tied to non-manufacturing business functions.

Product Costs Are Those Costs That Are Directly Related To The Production Of The Particular Product. Examples of product costs include Direct Materials, Direct Labor And Manufacturing Overhead Cost.Period Costs Are Those Costs That Are Directly Or Assigned To The Production Of The Particular Product. Examples Of Period Costs Includes Selling Expenses, Administrative Expenses Etc.Indicating Whether each of the following Costs is a Product Cost Or a Period Cost - Eventa.Goods Purchased For ResaleProduct Costb.Salaries Of Sales PersonsPeriod Costc.Advertising CostsPeriod Costd.Transportation-OutPeriod Coste.Interest on a Note PayablePeriod Costf.Salary Of The Company PresidentPeriod Costg.Transportation-InProduct Costh.Insurance On The Office BuildingPeriod Costi.Office SuppliesPeriod CostEventa.Goods Purchased For ResaleProduct Costb.Salaries Of Sales PersonsPeriod Costc.Advertising CostsPeriod Costd.Transportation-OutPeriod Coste.Interest on a Note PayablePeriod Costf.Salary Of The Company PresidentPeriod Costg.Transportation-InProduct Cost

Answered: ndicate whether each of the following…

Business

Accounting

ndicate whether each of the following costs is a product cost or a period (selling and administrative) cost: Event a. b Goods purchased for resale.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

**Cost Classification Exercise: Product Cost vs. Period Cost**

**Instructions:**
Identify whether each of the following costs is classified as a product cost or a period (selling and administrative) cost.

| **Event** | **Cost Type** |
|----------------------------------------------|----------------------------------|
| a. Goods purchased for resale. | |
| b. Salaries of salespersons. | |
| c. Advertising costs. | |
| d. Transportation-out. | |
| e. Interest on a note payable. | |
| f. Salary of the company president. | |
| g. Transportation-in. | |
| h. Insurance on the office building. | |
| i. Office supplies. | |

**Explanation:**
Each event listed is a cost incurred by businesses. Your task is to determine if the cost aligns more with product operations or if it's associated with selling and administrative activities. Product costs are part of the manufacturing process, while period costs are tied to non-manufacturing business functions.

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