What determines the difference between a product cost and a period cost?
A)Whether the cost changes when activity levels change.
B)Whether the cost is relevant to a particular decision.
C)Whether the cost can be traced to a specific cost object.
D)When the cost will be matched against revenue on the income statement.

Question

Quizplus · Accepted Answer

Product costs are capitalized as inventory on the balance sheet and expensed as cost of goods sold when the product is sold, thus matched against revenue on the income statement. Period costs are expensed in the period in which they are incurred.

What Determines the Difference Between a Product Cost and a Period