Which of the Following Statements Is True About Period Costs

question 93

Multiple Choice

Which of the following statements is true about period costs?

• A)Operating expenses are not period costs.
• B)Period costs are expensed when the products associated with these costs are sold.
• C)Period costs are usually recorded as assets.
• D)Most period costs are expensed in the period the costs are incurreD.Most period costs, such as advertising, salaries and wages, rent, and insurance, are expensed when they are incurred.

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Definitions:

Production Constraint

Any factor that limits the volume or type of production a company can achieve, such as equipment capacity or availability of materials.

Contribution Margin

The amount of revenue from sales that exceeds the variable costs associated with producing a product, indicating how much revenue contributes towards covering fixed costs and profit.

Constrained Resource

A limited resource in a production or project environment that restricts the output or progress of operations.

Vertically Integrated

A company structure where the supply chain of a company is owned or controlled by that company, from raw materials to final product distribution.