Q16-5SE-a
Question
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
a. Salaries of scientists studying ways to speed forest growth.
Step-by-Step Solution
Verified Answer
The salaries of scientists will come under the period cost.
1Definition of period cost
The period cost is defined as the operating costs which are expensed in the particular accounting period in which it is incurred.
2Identification of cost
The correct option is Period cost.
In this case, the company is paying salaries to the scientists who are studying ways to speed up forest growth. This is not an expense that is related to the production of goods. It is an expense that is recorded when it is incurred
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