Difference Between Product Cost And Period Cost
The main dissimilarities or difference between product cost and period cost can be pointed out as follows:
1. Introduction
Product Cost: Costs incurred while manufacturing the product such as direct materials, direct labor etc.
Period Cost: Costs not directly connected in the production but related with selling and administrative functions
2. Based On
Product Cost: It is based on the volume of production
Period Cost: It is based on the passage of time
3. Type Of Cost
Product Cost: Generally it denotes variable costs
Period Cost: Generally it denotes fixed costs
Also Read:
Also Read:
4. Incurred
Product Cost: Will not incur if there is no production
Period Cost: Will incur if there is no production also
5. Subcategories
Product Cost: Fixed and variable costs
Period Cost: Selling and administrative expenses
6. Examples
Product Cost: Raw materials, labor, factory overheads, wages etc.
Period Cost: Depreciation, rent, utilities etc.
Product Cost Vs Period Cost (Comparison Chart)
I hope this post is helpful to understand the difference between product cost and period cost and to make comparison between them.
Product Cost Vs Period Cost (Comparison Chart)
Basis For Difference
|
Product Cost
|
Period Cost
|
Introduction
|
Cost incurred during manufacturing process
|
Cost related to administrative and selling functions
|
Based On
|
Production volume
|
Passage of time
|
Denotes
|
Variable costs
|
Fixed costs
|
No Production
|
Not incur
|
|
Subcategories
|
Fixed and variable costs
|
Selling and administrative costs
|
Examples
|
Labor, raw materials etc.
|
Rent, depreciation etc.
|
I hope this post is helpful to understand the difference between product cost and period cost and to make comparison between them.
