Question

Which of the following is an example of a period cost in a company that makes clothing? Multiple Choice Monthly depreciation on production equipment. Advertising cost for a new line of clothing. Factory supervisor’s salary. Fabric used to produce men’s pants.

Answer 1

An example of a period cost in a company that makes clothing is monthly depreciation on production equipment.

What is a period cost?

Period costs are all costs that cannot be capitalised on a company's balance sheet. It is a cost that cannot be tied to the production of the goods made by the company.

Example of period costs are:

• Travel and entertainment expenses.
• Commissions.
• Depreciation expense.