Period cost means.
a) Variable Cost
b) Prime Cost
c) Fixed Cost
d) Factory Cost
Answers
Answer:
c. fixed cost
Explanation:
A period cost is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets. A period cost is more closely associated with the passage of time than with a transactional event.
Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities.
Explanation:
Production costs are usually part of the variable costs of business because the amount spent will vary in proportion to the amount produced. However, the costs of machinery and operational spaces are likely to be fixed proportions of this, and these may well appear under a fixed cost heading or be recorded as depreciation on a separate accounting sheet.
The person creating the production cost calculation, therefore, has to decide whether these costs are already accounted for or if they must be a part of the overall calculation of production costs.
Also, fixed and variable costs may be calculated differently at different phases in a business's life cycle or accounting year. Whether the calculation is for forecasting or reporting affects the appropriate methodology as well.