Period cost
A period cost is charged to the period’s profit calculation rather than carried forward in product inventory. The classification depends partly on the costing method: fixed production overhead is a period cost under marginal costing but included in product cost under absorption costing. Selling and general administration costs are normally period costs in production-cost statements. Period treatment does not imply that the cost is paid immediately or can be avoided.
Worked example
Monthly factory fixed overhead of $10,000 is charged in full under marginal costing even if some output remains unsold.
Common mistake
Period cost and fixed cost are not exact synonyms: variable selling commission is also normally a period cost.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
