{"id":184069,"date":"2024-01-21T21:14:59","date_gmt":"2024-01-21T21:14:59","guid":{"rendered":"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/"},"modified":"2024-01-21T21:14:59","modified_gmt":"2024-01-21T21:14:59","slug":"what-is-the-period-cost","status":"publish","type":"post","link":"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/","title":{"rendered":"What is the period cost?"},"content":{"rendered":"<p>Period costs are expenses that a company incurs during a specific period, such as a month or a year, and are not directly tied to the production of goods or services. They are unrelated to the direct costs associated with manufacturing a product. From a financial perspective, period costs are subtracted from a company&#8217;s revenue to determine its net income.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_62 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#What_is_the_period_cost\" title=\"What is the period cost?\">What is the period cost?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#What_are_the_different_types_of_period_costs\" title=\"What are the different types of period costs?\">What are the different types of period costs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Are_period_costs_directly_associated_with_production\" title=\"Are period costs directly associated with production?\">Are period costs directly associated with production?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Why_are_period_costs_important_to_consider\" title=\"Why are period costs important to consider?\">Why are period costs important to consider?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#What_is_the_difference_between_period_costs_and_product_costs\" title=\"What is the difference between period costs and product costs?\">What is the difference between period costs and product costs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Can_period_costs_be_directly_allocated_to_a_product_or_service\" title=\"Can period costs be directly allocated to a product or service?\">Can period costs be directly allocated to a product or service?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#What_are_some_examples_of_period_costs\" title=\"What are some examples of period costs?\">What are some examples of period costs?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#How_are_period_costs_accounted_for\" title=\"How are period costs accounted for?\">How are period costs accounted for?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#How_can_reducing_period_costs_benefit_a_company\" title=\"How can reducing period costs benefit a company?\">How can reducing period costs benefit a company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Do_period_costs_affect_product_pricing\" title=\"Do period costs affect product pricing?\">Do period costs affect product pricing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Are_period_costs_fixed_or_variable_expenses\" title=\"Are period costs fixed or variable expenses?\">Are period costs fixed or variable expenses?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#Can_period_costs_be_capitalized\" title=\"Can period costs be capitalized?\">Can period costs be capitalized?<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_period_cost\"><\/span>What is the period cost?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nThe period cost refers to expenses that a company incurs over a specific period which are unrelated to the production of goods or services.<\/p>\n<p>Period costs can take various forms, including selling, general, and administrative (SG&#038;A) expenses. Selling expenses are associated with the process of marketing and distributing a company&#8217;s products or services. Examples of selling expenses include advertising, sales commissions, and shipping costs.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_are_the_different_types_of_period_costs\"><\/span>What are the different types of period costs?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nThe different types of period costs include selling expenses, general expenses, and administrative expenses. Selling expenses are related to marketing and distribution, while general expenses are incidental costs such as rent and utilities. Administrative expenses encompass the costs of managing the overall organization, such as executive salaries and office supplies.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Are_period_costs_directly_associated_with_production\"><\/span>Are period costs directly associated with production?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nNo, period costs are not directly associated with the production process of goods or services. They are incurred over a specified period and are necessary for the overall operation of the business, which includes tasks such as marketing, distribution, and administration.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Why_are_period_costs_important_to_consider\"><\/span>Why are period costs important to consider?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nPeriod costs are important as they impact a company&#8217;s profitability and can be crucial for financial reporting. By accurately accounting for period costs, businesses can assess their financial performance and evaluate the effectiveness of their expense management.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_the_difference_between_period_costs_and_product_costs\"><\/span>What is the difference between period costs and product costs?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nPeriod costs are distinct from product costs because they are not directly tied to the production of goods or services. Product costs, on the other hand, include direct materials, direct labor, and overhead costs that are incurred in the manufacturing process.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Can_period_costs_be_directly_allocated_to_a_product_or_service\"><\/span>Can period costs be directly allocated to a product or service?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nGenerally, period costs cannot be directly allocated to a product or service because they are not directly tied to the production process. Instead, they are expensed over a specific period, such as a month or a year.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_are_some_examples_of_period_costs\"><\/span>What are some examples of period costs?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nExamples of period costs include advertising expenses, sales commissions, executive salaries, rent, utilities, office supplies, legal fees, and accounting expenses. These costs are necessary for the overall operation of the business but are not directly tied to the production process.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How_are_period_costs_accounted_for\"><\/span>How are period costs accounted for?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nPeriod costs are typically accounted for as expenses on the income statement during the period in which they are incurred. They are subtracted from a company&#8217;s revenue to calculate its net income.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"How_can_reducing_period_costs_benefit_a_company\"><\/span>How can reducing period costs benefit a company?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nReducing period costs can benefit a company by improving its profitability. By actively managing and minimizing its selling, general, and administrative expenses, a business can enhance its financial performance and potentially increase its net income.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Do_period_costs_affect_product_pricing\"><\/span>Do period costs affect product pricing?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nWhile period costs do not directly impact product pricing, they do influence a company&#8217;s overall financial health and profitability. Strategic management of period costs can help maintain competitive pricing while maximizing profits.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Are_period_costs_fixed_or_variable_expenses\"><\/span>Are period costs fixed or variable expenses?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nPeriod costs can be both fixed and variable. Fixed period costs, such as rent or executive salaries, remain unchanged regardless of the level of production or sales. Variable period costs, such as advertising expenses or sales commissions, fluctuate with changes in business activity.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Can_period_costs_be_capitalized\"><\/span>Can period costs be capitalized?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>\nPeriod costs cannot be capitalized as they are expensed in the period they are incurred. Capitalizing expenses means recognizing them as assets on the balance sheet, which is not applicable to period costs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Period costs are expenses that a company incurs during a specific period, such as a month or a year, and are not directly tied to the production of goods or services. They are unrelated to the direct costs associated with manufacturing a product. From a financial perspective, period costs are subtracted from a company&#8217;s revenue &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"What is the period cost?\" class=\"read-more button\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/#more-184069\">Read more<span class=\"screen-reader-text\">What is the period cost?<\/span><\/a><\/p>\n","protected":false},"author":47,"featured_media":107420,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86279],"tags":[],"class_list":["post-184069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-learn","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is the period cost?<\/title>\n<meta name=\"description\" content=\"Period costs are expenses that a company incurs during a specific period, such as a month or a year, and are not directly tied to the production of goods\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the period cost?\" \/>\n<meta property=\"og:description\" content=\"Period costs are expenses that a company incurs during a specific period, such as a month or a year, and are not directly tied to the production of goods\" \/>\n<meta property=\"og:url\" content=\"https:\/\/namso-gen.co\/blog\/what-is-the-period-cost\/\" \/>\n<meta property=\"og:site_name\" content=\"Namso Gen Blog - 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Free Credit Card Generator [100% Valid]"},"image":{"@id":"https:\/\/namso-gen.co\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/synchronyfinancial","https:\/\/twitter.com\/synchrony","https:\/\/www.youtube.com\/synchronyfinancial","https:\/\/www.instagram.com\/synchrony","https:\/\/www.linkedin.com\/company\/synchrony-financial"]},{"@type":"Person","@id":"https:\/\/namso-gen.co\/blog\/#\/schema\/person\/9950e9779e02528a417b0190c00d0c00","name":"Arturo Morse","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/namso-gen.co\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","caption":"Arturo Morse"},"description":"Guest author Arturo Morse has meticulously crafted and revised this article to the best of their knowledge and understanding. Readers are strongly advised to exercise caution, verify information independently, and rely on their own judgment when considering the information provided. Read more articles on Namso Gen here."}]}},"_links":{"self":[{"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/posts\/184069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/comments?post=184069"}],"version-history":[{"count":0,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/posts\/184069\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/media\/107420"}],"wp:attachment":[{"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/media?parent=184069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/categories?post=184069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/namso-gen.co\/blog\/wp-json\/wp\/v2\/tags?post=184069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}