If selling and administrative expenses are allocated to different products, they should be reported as a period cost, cost of goods manufactured, factory overhead cost, or cost of... If selling and administrative expenses are allocated to different products, they should be reported as a period cost, cost of goods manufactured, factory overhead cost, or cost of goods sold?
Understand the Problem
The question is asking for the correct classification of selling and administrative expenses when they are allocated to different products. It requires understanding the concepts of cost classification in accounting.
Answer
Period cost
If selling and administrative expenses are allocated to different products, they should be reported as a period cost.
Answer for screen readers
If selling and administrative expenses are allocated to different products, they should be reported as a period cost.
More Information
Selling and administrative expenses are considered period costs because they are not directly tied to the production process and are expensed within the period in which they occur.
Tips
A common mistake is to classify selling and administrative expenses as product costs or factory overhead, which are directly tied to the production process. Ensure you differentiate between costs tied to production and those that are not.
Sources
- Selling and Administrative Expenses Allocated - Chegg - chegg.com
- Period and Product Costs - Lumen Learning - courses.lumenlearning.com
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