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Q16-5SE-d

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Horngren'S Financial And Managerial Accounting
Found in: Page 886

Short Answer

Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:

d. Salaries of the company’s top executives.

The salaries of company’s top executives will come under the period cost.

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Step by Step Solution

Definition of manufacturing company

A manufacturing company is defined as a business organization that sells the goods produced by themselves

Identification of cost

The correct option is Period cost.

In this case, the company is paying salaries to the top executive of the company. This comes under the selling and administrative expenses. So, it will be considered as the period cost.

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