On Your Test
Product vs Period Costs

You will be expected to know the following for multiple choice concept
      questions. Almost all questions will relate to these things:     
         The definition of a product cost
         What types of costs are product costs and the definition of each
         When is something a direct material
         When is something direct labor
         When is something part of manufacturing overhead
         When are product costs reported on the balance sheet and when are
            product costs reported on the income statement
         What is the definition of period costs
         How are period costs reported on the financial statements
         The difference in the three types of period costs
         What is a prime cost, a conversion cost, a direct cost, an indirect cost;
            and be able to identify them in a list
You will be asked to do the following on problems and multiple choice 
      problems that require calculations. It boils down to this:
         From a list of costs:
                  Determine if each cost is a product or period cost and what
                     category of each would it fall under
                  Determine if the costs are direct or indirect
         Determine total product costs and total period costs in a given situation      
         Group the product costs given into direct material, direct labor and
            manufacturing overhead to get a total for each
         Know the definition of each term on your Key Things to Know Sheet – See Self Test