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In Year 1 and with $100,000, Ronald establishes a joint savings account with his cousin, Allison. In Year 2, Allison withdraws the $100,000 and disappears. Ronald made a gift to Allison in Year 2.
Period Cost
Costs that are expensed in the period they are incurred and are not directly tied to the production of goods.
Product Cost
The total cost to produce a product, including direct labor, materials, and manufacturing overhead.
Prime Cost
The direct costs of manufacturing an item, which include direct materials and direct labor costs, but exclude overhead costs.
Conversion Cost
The total expenses of direct labor plus manufacturing overheads used to transform raw materials into finished products.
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