Q16-5SE-g
Question
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
g. Depreciation on the manufacturing plant.
Step-by-Step Solution
Verified Answer
The depreciation of the manufacturing plant comes under the product cost.
1Definition of Depreciation
Depreciation is defined as the method of allocating the cost of an asset to its useful life.
2Identification of cost
The correct option is Product cost.
The company has charged the depreciation of the manufacturing plant, which is used for the manufacturing process. So, it makes the depreciation of the manufacturing plant a product cost.
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