Cost Accounting

Treatment of Costs

Product Costs

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)

Period Costs

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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