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Which of the following best describes a period cost?
A) A cost that relates to a time period which is deducted as expenses for the period and is not included in the inventory valuation.
B) A cost that can be easily allocated to a particular period, without the need for arbitrary apportionment between periods.
C) A cost that is identified with a unit produced during the period, and is included in the value of inventory. The cost is treated as an expense for the period when the inventory is actually sold.
D) A cost that is incurred regularly every period, eg every month or quarter.Professor, what makes B incorrect?
We do not allocate it to a particular period – we charge it in the period in which it is actually incurred.
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