15RQ - Horngren'S Financial And Managerial Accounting

Question

How do period costs differ from product costs?                            

Step-by-Step Solution

Answer

The major difference is that period costs are a normal operating expense and product costs are incurred on producing goods.

Definition of cost

The costs are defined as the cost incurred by the business on producing or procuring some goods and any other assets.

Difference between period costs and product cost

The cost of purchasing or producing the product is known as the product cost. But on the other hand, period costs are the operating cost that is expensed in a particular accounting period in which it is incurred.