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Cost Accounting
Treatment of Costs
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Learning Objectives
Product Costs
Product costs are any costs linked to the manufacture of a product or a service.
Formula of Product Cost Product Cost = Direct Materials + Direct Labour + Factory Overhead (Indirect Materials + Indirect Labour)
Period Costs
Period costs are any costs that are not linked to the manufacture of a product or a service. Do not get these confused with indirect costs, indirect costs can also be linked to the manufacture of a product.
Some period costs can include:
Rent
Interest
Insurance
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