Costs that can be reasonably associated with specific revenues but not with specific products should be
A) charged to expense in the period incurred.
B) allocated to specific products based on the best estimate of the production processing time.
C) expensed in the period in which the related revenue is recognized.
D) capitalized and then amortized over a period not to exceed 60 months.

Question

Quizplus · Accepted Answer

Costs that can be reasonably associated with specific revenues but not with specific products are referred to as period costs. Such costs should be expensed in the period in which the related revenue is recognized. This is because period costs are not related to specific products but are incurred to support the overall revenue-generating activities of the business during the period. Allocating these costs to specific products may distort the actual cost of production, hence, expensing them in the period incurred is the most appropriate option.

Costs That Can Be Reasonably Associated with Specific Revenues but Not