Which of the following is NOT a period cost?Question 13Select one:a.depreciation on the research and development facility.b.depreciation on sales staff’s iPhone.c.depreciation on the photocopier in the CEO’s office.d.depreciation on the manufacturing equipment.
Question
Which of the following is NOT a period cost?Question 13Select one:a.depreciation on the research and development facility.b.depreciation on sales staff’s iPhone.c.depreciation on the photocopier in the CEO’s office.d.depreciation on the manufacturing equipment.
Solution
The answer is d. Depreciation on the manufacturing equipment.
Here's why:
Period costs are all costs not included in product costs. Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs.
a. Depreciation on the research and development facility - This is a period cost because it's not directly tied to the production process.
b. Depreciation on sales staff’s iPhone - This is a period cost because it's an administrative expense, not directly tied to the production process.
c. Depreciation on the photocopier in the CEO’s office - This is a period cost because it's an administrative expense, not directly tied to the production process.
d. Depreciation on the manufacturing equipment - This is NOT a period cost because it's directly tied to the production process. It's a product cost, not a period cost.
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