Cost Accounting

Treatment of Costs

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Content Contributors
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Priya Kaur

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Christian Bien

Learning Objectives

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Product Costs
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Product costs are any costs linked to the manufacture of a product or a service. 


Formula of Product Cost Product Cost = Direct Materials + Direct Labour + Factory Overhead (Indirect Materials + Indirect Labour)

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Period Costs
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Period costs are any costs that are not linked to the manufacture of a product or a service. Do not get these confused with indirect costs, indirect costs can also be linked to the manufacture of a product. 


Some period costs can include: 

  • Rent 

  • Interest 

  • Insurance

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Time Orientation of Costs
Treatment of Costs
Relationship Costs
Behavioural Costs
Concept and Calculation of Mark Up
Direct Material Price Variance
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