Period Costs
Expenses matched to the time period in which they occur rather than to products, including selling, administrative, and other non-production costs.
Period Costs
Expenses that are matched to the time period in which they are incurred rather than to specific products or services, typically including selling, general, administrative, and other non-manufacturing costs.
For example, a company’s period costs might include $200,000 monthly in administrative salaries, $50,000 in marketing expenses, $30,000 in office rent, and $20,000 in interest expense, all expensed in the period incurred regardless of production or sales volumes.
Unlike product costs (which are inventoried for manufactured goods), period costs are immediately expensed on the income statement in the period incurred. They generally relate to time rather than production activity and would continue even if production temporarily ceased. Common period costs include selling expenses, administrative salaries, office expenses, depreciation of non-manufacturing assets, interest, and research and development costs.