Distinguishing between product and period costs is sometimes guided by the value-added principle.

Question

Answer the following statement true (T) or false (F)

Answer 1

False

Product costs are comprised of the materials used to make the products, the labor used to transform the materials into products, and the overhead (other resources consumed in the process of making the products). Selling, general, and administrative costs are normally expensed in the period in which they are incurred. Because of this recognition pattern, nonproduct expenses are sometimes called period costs.