Costs that are incurred in generating revenues during the period, but are not involved in the manufacturing process, are referred to as:
Understand the Problem
The question is asking about the classification of costs incurred in generating revenues that are not directly related to the manufacturing process. The high-level approach to answer this involves understanding accounting terminology and cost classifications.
Answer
Period costs
The costs incurred in generating revenues during the period, but which are not involved in the manufacturing process, are referred to as period costs.
Answer for screen readers
The costs incurred in generating revenues during the period, but which are not involved in the manufacturing process, are referred to as period costs.
More Information
Period costs include selling and administrative expenses, and they are not tied to the manufacturing process. These are crucial for understanding a company's overall expenses as they reflect costs attributable to a specific accounting period rather than specific products.
Tips
A common mistake is confusing period costs with product costs. Remember that product costs are directly tied to manufacturing, whereas period costs are not.
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