Which is not a fixed cost?
Wages paid to workers however can vary as the number of workers increase or decrease. Hence it is not considered as a fixed cost.
What type of asset is an insurance policy?
Whole life insurance and other forms of cash value life insurance—such as universal and variable life insurance—are liquid assets. With a whole life insurance policy, a portion of your premiums go into a tax-deferred savings component, often referred to the cash value of the policy.
What are 5 variable costs?
Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.
What are examples of fixed expenses?
Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).
Which of the following is a variable cost in an insurance?
The correct answer is c. Sales commissions are variable costs, as sales are different every month.
Is insurance on factory a period or product cost?
Answer and Explanation: The factory insurance cost for a firm is a product cost as it is a manufacturing overhead cost that can be allocated to the number of units produced by using the activity-based costing method.
What is not included in period cost?
Items that are not period costs are those costs included in prepaid expenses, such as prepaid rent. Also, costs included in inventory, such as direct labor, direct materials, and manufacturing overhead, are not classified as period costs.
What is period vs variable costs?
A period cost is generally fixed like salaries, rent and is revised yearly. Product cost is generally variable as it depends on the production of goods. Examples of period costs are audit fees, sales fees, rent of the office building, etc.
Is insurance a fixed manufacturing cost?
Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
Are period costs always 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.
What type of an asset is insurance?
Insurance is an expense to a business and is carried as prepaid expense (paid in advance) under the head of current assets in the balance sheet of a company till it is paid.
Is insurance a current asset?
Prepaid insurance is usually considered a current asset, as it becomes converted to cash or used within a fairly short time.
What are fixed cost examples?
Fixed cost is a business expense that does not change regardless of the activity level of the business. Examples of fixed costs include rent, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities.
Is insurance a semi variable cost?
Semi-variable Cost Examples Generally, the cost of the vehicle is fixed regardless of its level of usage. This comprises depreciation, insurance and the driver’s monthly salary.
What is an example of a period cost?
In managerial and cost accounting, period costs refer to costs that are not tied to or related to the production of inventory. Examples include selling, general and administrative (SG&A) expenses, marketing expenses, CEO salary, and rent expense relating to a corporate office.
What is classified as a period cost?
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.
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.
Is insurance part of manufacturing cost?
While total insurance costs are part of a company’s overhead, the insurance costs solely related to the factory are part of its factory overhead. These costs can include insurance fees for the factory building, various pieces of equipment, employee health and safety, vehicles and any other insured factory item.
What is an example of a product and period cost?
Examples of product costs are direct materials, direct labor, and allocated factory overhead. Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities.
What is not included in product cost?
SG&A Not Included in Product Costs The selling, general, administrative (SG&A) and interest costs of a retailer and/or a manufacturer are not product costs.
