The First Type of Expense Is a Product Cost

question 80

Short Answer

The first type of expense is a product cost.These costs can be directly matched to specific transactions or events and are recognized upon recognition of revenue.
2.The second type of expense is a period cost.These are expenses recognized during the period in which cash is spent or liabilities are incurred for goods and services to be used up within a short amount of time.
3.The last type of expense includes those that are allocated systematically and rationally to the period during which the related assets are expected to provide benefits.

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Definitions:

Materials Quantity Variance

The difference between the budgeted and actual quantities of materials used in production, affecting cost management.

Standard Cost

A predetermined cost of manufacturing, calculated based on the expected costs of material, labor, and overhead for a unit of product.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost, reflecting changes in material prices.

Materials Quantity Variance

The difference between the expected amount of materials needed for production and the actual amount used.