A Classmate Is Having Difficulty Understanding Two Sets of Accounting

question 186

Essay

A classmate 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: Assist your classmate in being able to distinguish between these terms.

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Definitions:

Globalization Of Production

The sourcing of land, labor, and capital from different nations rather than obtaining everything locally.

Outsourcing

The business practice of hiring a party outside a company to perform services and create goods traditionally performed in-house by the company's own employees and staff.

Writing Services

Professional services that provide written content for a variety of purposes, including academic, business, and creative writing.

Consumer Products

Goods and services that are produced for personal use or consumption by the general public.