Product cost consists of cost which have been used in making or acquiring the product. Product costs are included in determining the cost of a product. In a manufacturing business, their period cost consist of direct materials, direct labor and factory overhead. Product cost becomes part of the cost of inventory which is why it is also called inventoriable cost.
Period Cost
Period cost are cost which are not considered as product cost. These costs are charged against revenue for its full amount and are treated as expense without regards to production and sales. This is not part of the cost of inventory.
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