Product cost vs period cost
What is a product cost versus a period cost? Let’s discuss the accounting concepts product cost and period cost with some easy to understand examples.
⏱️TIMESTAMPS⏱️
0:00 Introduction
0:30 Product cost vs period cost definition
0:48 Product cost vs period cost examples
2:29 Product cost in cost accounting
3:21 Product cost and period cost in the income statement
Product costs include all the costs that are involved in acquiring or making product. Product costs are viewed as "attaching" to units of product as the goods are purchased or manufactured. Inventory is an asset on the balance sheet. This is why product costs are sometimes called “inventoriable costs”, they remain attached as the goods go into inventory awaiting sale.
Period costs are expensed on the income statement in the period in which they are incurred. Period costs are not a necessary part of the manufacturing process. As a result, period costs cannot be assigned to the products or to the cost of inventory.
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Пікірлер: 37
Thank you! At one point around the 3:20 mark, you mistakenly said period costs instead of product costs are sometimes called inventoriable costs
@TheFinanceStoryteller
5 жыл бұрын
Thank you very much for spotting that mistake. I have inserted at this timestamp a card, and updated the subtitles, to point viewers at the correction.
@fedoraazalia
Жыл бұрын
@@TheFinanceStoryteller is salaries of personnel who work in the finished goods warehouse part of manufacturing overhead?
@TheFinanceStoryteller
Жыл бұрын
@@fedoraazalia Hi! I would be inclined to say this is a period cost, as you could consider it part of the selling expenses, which in turn is part of SG&A (selling, general and administrative expenses). But I am not completely sure.
Thank you for this very comprehensive explanation!
@TheFinanceStoryteller
3 жыл бұрын
Glad it was helpful, Shannen! 🙂
Thank you! Very helpful!
@TheFinanceStoryteller
5 жыл бұрын
You're welcome!
you helped me with my homework! thank you :)
@TheFinanceStoryteller
3 жыл бұрын
Happy to help! Understanding product cost vs period cost is key in inventory valuation, cost of goods sold, and gross margin. Once you get it, a lot of other things become simple....
Thank you soooo much!
@TheFinanceStoryteller
Жыл бұрын
Happy to help!
Saved me😭 thank you so much ❤
@TheFinanceStoryteller
4 жыл бұрын
You're welcome, Briteny! :-)
doesnt stick to the product.you explained very well love this video
@TheFinanceStoryteller
4 жыл бұрын
Thank you, Muhammad! Nice to hear that.
Genius !!
@TheFinanceStoryteller
5 жыл бұрын
Thank you!
Thank you accounting Khabib
@TheFinanceStoryteller
3 жыл бұрын
You're welcome!
what about salary's labour in factory ? its product or periode ?
@TheFinanceStoryteller
Жыл бұрын
Product cost.
loved this thank u my nigga
Sir, what about salaries of personnel who work in the finished goods warehouse? Is a period cost or product cost?
@TheFinanceStoryteller
Жыл бұрын
Hi! I would be inclined to say this is a period cost, as you could consider it part of the selling expenses, which in turn is part of SG&A (selling, general and administrative expenses). But I am not completely sure.
@fedoraazalia
Жыл бұрын
@@TheFinanceStoryteller thank you so much Sir!
3:15, you said period cost is sometimes called inventoriable cost, while textbook said product cost is inventoriable cost.
@TheFinanceStoryteller
3 жыл бұрын
You are absolutely correct! I put a note in the subtitles as well as the comments to highlight the mistake. My apologies!
Where does indirect labor and indirect materials can be considered, can it both?
@TheFinanceStoryteller
Жыл бұрын
Yes, they can be considered product cost, as long as you keep the definition of "indirect" fairly tight, in other words have a strong link with the production location.
Danjewel! :)
@TheFinanceStoryteller
3 жыл бұрын
Graag gedaan! Veel plezier met de video's! :-)
What about assembly cost? Is direct or indirect?
@TheFinanceStoryteller
Жыл бұрын
Product cost.
@noonagrandeur2363
Жыл бұрын
@@TheFinanceStoryteller so assembly cost is indirect?
@TheFinanceStoryteller
Жыл бұрын
Sounds like direct labor to put the product together, right?
Tux