What type of cost is classified as a Period Cost?

Period costs are expenses that are not directly tied to the production of goods. Instead, they are associated with the passage of time and are recorded in the income statement during the period in which they are incurred. These costs typically include selling, general, and administrative expenses that support the overall business operations but do not directly contribute to the production process.

In contrast, the other options refer to costs directly associated with manufacturing products or producing goods. Manufacturing-related costs include direct materials, direct labor, and manufacturing overhead, which are typically classified as product costs and treated differently in accounting. Since period costs do not get capitalized into inventory and are expensed in the period they are incurred, identifying them correctly is essential for accurate financial reporting and understanding overall business expenses.