Q16-5SE-i
Question
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
i. Life insurance on the CEO.
Step-by-Step Solution
Verified Answer
The life insurance for the CEO will come under the period cost.
1Definition of CEO
CEO stands for Chief Executive Officer, refers to the highest-ranking officer in a business organization or a company.
2Identification of cost
The correct option is Period cost.
The life insurance for the CEO of the company will be considered as compensation to the CEO of the company. Any compensation to the employees will come under selling and administration expenses. So, it will be the period cost.
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