A new employee in the accounting department is having difficulty understanding two sets of accounting terms-variable and fixed costs as opposed to period and product costs.He understands that variable costs change during an accounting period while fixed costs do not.However, he explains that a period cost implies that it is for a period of time and is, therefore, also fixed.Does his assumption imply that all product costs are then variable?
Required:
As part of your responsibility to train new staff, explain the difference between these terms.

Question

Quizplus · Accepted Answer

The Answer of A new employee in the accounting department is having difficulty understanding two sets of accounting terms-variable and fixed costs as opposed to period and product costs.He understands that variable costs change during an accounting period while fixed costs do not.However, he explains that a period cost implies that it is for a period of time and is, therefore, also fixed.Does his assumption imply that all product costs are then variable?
Required:
As part of your responsibility to train new staff, explain the difference between these terms.

A New Employee in the Accounting Department Is Having Difficulty