Is rent a period cost?
Understand the Problem
The question is asking whether rent is classified as a period cost in accounting. Period costs are expenses that are not tied directly to the production of goods, typically incurred over a specific period regardless of manufacturing output. This indicates a need for understanding accounting principles regarding costs.
Answer
It depends on usage.
Rent can be either a period cost or a product cost, depending on what the rented building is used for.
Answer for screen readers
Rent can be either a period cost or a product cost, depending on what the rented building is used for.
More Information
If the rented building is used for administration or office purposes, rent is a period cost. If it is used in the manufacturing process, rent is a product cost.
Tips
Be sure to differentiate by the purpose of the cost – whether it directly supports production or is related to general business operations.
Sources
- Period Costs vs. Product Costs: What's the Difference? - investopedia.com
- Is rent considered a period or a product cost? - homework.study.com
- Is rent expense a period cost or a product cost? - accountingcoach.com
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