Which of the following is a period cost?
A) costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties
B) the cost of materials used to make a product when those materials are an insignificant part of the finished product
C) the cost of direct labor
D) the amount of depreciation expense recognized because of the use of plant assets such as building and equipment

Question

Quizplus · Accepted Answer

A period cost is a cost that is not directly related to the production of goods or services, but rather to the operations of the business itself. Costs incurred to provide customer service, such as the operation of a 800 phone line, fall under this category as they do not directly contribute to producing goods or services but are necessary for the business to operate.

Which of the Following Is a Period Cost