Which Statement Best Describes a Period Cost

question 119

Multiple Choice

Which statement best describes a period cost?

• A) It is used to calculate product cost.
• B) It includes selling costs and administrative costs.
• C) It is carried in inventory until the goods are sold.
• D) It can be included in manufacturing overhead costs.

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Definitions:

Inventory Turnover Ratio

A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Average Cost Formula

A method used in accounting to calculate the cost of sold goods or services by dividing the total cost of goods available for sale by the total number of items available.

Ending Inventory

The total value of all goods available for sale at the end of an accounting period, used in calculating the cost of goods sold and determining profitability.

FOB Destination

A shipping term indicating that the seller bears the shipping costs and maintains ownership until the goods reach the buyer's location.