Understanding Period Costs: Examples and Importance for Business Profitability.

what would be classified as a period cost?

wages paid to a cost accounting department supervisor

A period cost is a cost that is incurred over a specific period of time and is not directly related to the production of goods or services. Here are some examples of period costs:

1. Selling and marketing expenses such as advertising, promotion, and sales salaries
2. General and administrative expenses such as office rent, utility bills, and executive salaries
3. Depreciation of fixed assets that are not used for production, such as office furniture and equipment
4. Property taxes, insurance, and other similar expenditures

Period costs are typically expensed in the period in which they are incurred and are not included in the cost of goods sold. These costs are important for businesses to track because they impact the profitability of the company during a specific period.

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