Q16-5SE-e
Question
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
e. Cost of chemicals to treat the paper.
Step-by-Step Solution
Verified Answer
The cost of chemicals to treat the paper will come under the product cost.
1Definition of cost
The cost is defined as any expense which is incurred by the business to acquire goods or any assets.
2Identification of cost
The correct option is Product cost.
In this case, the company is incurring the cost of chemicals which will help to treat the paper. This means the cost incurred is associated with the manufacturing process. So, it will be the product cost.
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