Are legal fees a period cost?
Asked by: Mr. Fausto Prohaska Sr. | Last update: November 16, 2023Score: 4.2/5 (54 votes)
In general, period expenses include items such as rent, utilities, insurance, and property taxes. They can also include legal fees and loan interest if these amounts are paid in advance.
Is a legal cost a period cost?
Period costs are unrelated to producing a product and are expensed in the period they are incurred. Examples of period costs include marketing expenses, salaries for the executive team, accounting and legal costs, etc.
What costs are considered period costs?
Period costs are all costs not included in product costs. Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs.
Which of the following costs is not considered a period cost?
The correct answer is d. Freight paid on a purchase of raw materials. Since this covers the cost of something that will be used in production, it is a product cost, rather than a period cost. Warehousing cost is the cost that a company incurs irrespective of production level.
What is the difference between cost and period cost?
Comparing Product Costs and Period Costs
The key difference between product costs and period costs is that product costs are only incurred if products are acquired or produced, and period costs are associated with the passage of time.
Product cost vs period cost
Is sales commissions a period cost?
Selling expenses such as sales salaries, sales commissions, and delivery expense, and general and administrative expenses such as office salaries, and depreciation on office equipment, are all considered period costs.
Is sales commission a product or period cost?
Sales commissions are always considered a period cost. Why? Because salespeople are not directly involved in manufacturing or acquiring your product. Instead, they are responsible for selling your product once it's ready for the market.
Which of the following costs is an example of a period cost rather than a product cost?
Correct answer: Option (b)wages of salespersons is the correct answer.
What is an example of a period cost quizlet?
In a manufacturing company, the salary of sales staff is an example of a period cost. For a manufacturer, rent paid for an office building is an example of a period cost. Factory rent, taxes, and insurance are included in manufacturing overhead. Direct materials and direct labor are prime costs.
Which of the following is true about period costs?
Most period costs are expensed in the period the costs are incurred.
Are period costs always an expense?
Period costs are always expensed on the income statement during the period in which they are incurred. In sum, product costs are inventoried on the balance sheet before being expensed on the income statement.
Which costs are least likely to be reported as an expense in the current accounting period?
Which costs are least likely to be reported as an expense in the current accounting period? Inventory costs are expensed when items are sold under the matching principle. As an extreme example, if no sales are made, no costs of inventory production are expensed for the period.
Is R&D a period cost?
Research and development or R&D costs are directly tied to the COGS of specific products and treated as overhead costs. Charging this overhead cost to the COGS of the recent period and considered as period cost. Thus, all the research and development or R&D costs are treated as period costs.
Are legal fees the same as costs?
Attorney fees are like wages; they are a charge for the time and labor of attorneys and their staff, such as paralegals. Fees do not include certain out-of-pocket costs (case costs) that are incurred as part of a legal case. Case costs are expenses on third parties — i.e., people other than the lawyers.
Are legal costs expensed or capitalized?
Costs related to the acquisition or disposal of an asset should be capitalized. The lawyer`s fees incurred to increase the price of insurance are investments within the meaning of Article 263 and result in a reduction in the capital gain.
Are legal fees an asset or expense?
However, some common expense categories for professional fees include: Legal Fees: These can include fees for attorneys, paralegals, and other legal professionals. Accounting Fees: These can include fees for certified public accountants (CPAs), bookkeepers, and other financial professionals.
What do period costs include quizlet?
Period costs include direct materials and direct labor. The cost of materials entering directly into the manufacturing process is classified as factory overhead cost. Manufacturers use machinery and labor to convert direct materials into finished products. A cost object indicates how costs are related or identified.
What are examples of indirect period cost?
Salaries: Salaries paid to non-production employees, such as administrative staff, managers, and other support personnel, are considered indirect labor expenses, which are a period cost. Utilities: Expenses such as gas and electric are considered a period cost, unless they directly involve the manufacturing plant.
Which of the following is not a prime cost?
Indirect costs, such as utilities, manager salaries, and delivery costs, are not included in prime costs.
What are examples of product and period costs?
Examples of period costs are audit fees, sales fees, rent of the office building, etc. Examples of product cost are raw material, direct labor, factory rent, inventory, etc.
What is period cost and irrelevant cost?
Relevant costs are costs that will be affected by a managerial decision. Irrelevant costs are those that will not change in the future when you make one decision versus another. Examples of irrelevant costs are sunk costs, committed costs, or overheads as these cannot be avoided.
Is supervisor salary a product or period cost?
Answer and Explanation: The supervisor salary is a manufacturing overhead cost as it is a factory cost, it is also included in the conversion cost along with direct labor. And it is also a product cost.
Is a loan payment overhead or period cost?
A company's income statement includes expenses that can be divided into two categories: period costs and product costs. Depreciation, loan interest payments, utilities and office supplies are period expenses.
Are property taxes a period cost?
Product cost. Product cost are related to production. Since this is property taxes on the factory, it is considered manufacturing overhead and will be allocated to products. Now property taxes on the headquarters building would be period costs since they don't relate to production.
Are commissions a cost of goods sold or expense?
Sales commissions paid out are classified as a selling expense, and so are reported on the income statement within the operating expenses section. This means that commissions are situated after the cost of goods sold.