the difference between a product cost and a period cost is explained below.
Costs are classified as either product costs or period costs for the purposes of valuing inventories and evaluating expenses for the balance sheet and income statement.
Product costs are allocated to inventories and are treated as assets till the products have been sold.
Product costs become the cost of goods sold on the income statement at the point of sale.
Period costs, on the other hand, are directly taken to the income statement as expenses for the period in during which they are incurred, according to standard accrual practices.
Product cost in a merchandising company is how much the company has paid for its merchandise.
In a manufacturing company's external financial reports, product costs include all manufacturing costs.
Selling and administrative costs are regarded as period costs in both types of businesses and are expensed as they are incurred.
Hence, product cost and periodic cost differ in nature.
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The difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period is called activity variance.
Activity variance are the differences between the static/making plans price range and the flexible finances and are because of the distinction between deliberate and actual hobby ranges.
what is sales activity variance?
Activity variance is the difference between actual sales and budgeted sales. it's miles used to degree the performance of a income function, and/or analyze enterprise effects to better understand marketplace conditions.
What is activity variance in managerial accounting?
An activity variance is the difference. between a sales or price object within the bendy finances and the equal item within the static planning price range. An hobby variance is due completely to the difference inside the actual degree of hobby used inside the bendy price range and the extent of hobby assumed inside the making plans finances.
How do if a activity variance is favorable or unfavorable?
Whilst sales is better than the price range or the real prices are less than the price range, that is taken into consideration a favorable variance. negative variances confer with instances while costs are better than your price range expected they would be.
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Answer:
New Long term debt = $8000
Explanation:
The computation of the net new long term debt is given below:
Sales $750000
Less: Expenses:
COGS -$540,000
Selling expenses -$85,000
Depreciation -$190,000
Interest- $65,000
Total Expenses -$880,000
Net Loss -$130,000
Add: Non- cash expense ie. Depreciation +$190,000
Net Cash flow $60,000
Less: Cash Dividend declared -$68,000
New Long term debt = $8000