DIFFERENCE BETWEEN PRODUCT COST AND PERIOD COST
Period cost vs Product cost is nothing but the expenses in the company, and anything management of a company wants a separate measurement cost because in any business cost is a major concern. The cost of any product is classified into Period cost and Product cost based on its relation with the products.
The key difference between product cost and period cost is that product concurs when a company produces any products. Therefore, such costs are apportioned to a product. On the other hand, period costs incur with time. Consequently, they are not apportioned to any product but charged as an expense in the income statement.
In business, the cost is a significant concern, and it is mainly associated with the production of revenue. It is often crucial to a company’s competence to improve its margins and market share in the long run. Different business costs are variable, fixed, period, or product costs.
Product costs (also known as inventoriable costs) are costs assigned to products. These costs are identified as being either direct materials, direct labor, or factory overheads, and they are traceable or assignable to products. ….
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