18.2 Product vs Period costs

VCE Accounting Unit 4

1. 18.2 product vs period costs

2. From Unit 3… 18.2 Product vs Period Costs Supplier Business Customer All expenses incurred in acquiring stock and getting it ready for sale . Cost of Goods Sold All costs involved in getting stock from store to the customer Other Expenses Cost of sales Cartage in Packaging Buying expenses Customs Cartage out Carry bags Advertising Vehicle expenses Etc .

3. 18.2 Product vs Period Costs Supplier Business Customer All expenses incurred in acquiring stock and getting it ready for sale . Cost of Goods Sold All costs involved in getting stock from store to the customer Other Expenses Cartage out Carry bags Advertising Vehicle expenses Etc . Product Cost Period Cost CAN allocate to each unit of stock CAN’T allocate to each unit of stock

4. 18.2 Product vs Period Costs Cost of Goods Sold Other Expenses Customs duty $3 Packaging $1 Cost of materials $200 Cartage inwards $1 Buying Expenses $2,000 Advertising $400 Rent $3,000 Product Cost Period Cost Cartage inwards $1/unit Materials $ 200/unit Rent $3,000/month Packaging $1/unit Advertising $400/month Buying expenses $2,000/month Customs duty $3/unit Customs duty $3 Packaging $1 Cost of materials $200 Cartage inwards $1 Customs duty $3 Packaging $1 Cost of materials $200 Cartage inwards $1 Advertising $400 Rent $3,000 Customs duty $3 Packaging $1 Cost of materials $200 Cartage inwards $1 Advertising $400 Rent $3,000 Buying Expenses $2,000 Customs duty $3 Packaging $1 Cost of materials $200 Cartage inwards $1 CAN allocate to each unit of stock CAN’T allocate to each unit of stock $205/unit

5. 18.2 Product vs Period Costs Other Expenses Product Cost Period Cost Advertising $400 Rent $3,000 Buying Expenses $2,000 Cost of Goods Sold $205/unit Income Statement Revenue $ $ Sales (20 x $539)   10780 less Cost of Goods Sold Cost of Sales (20 x $205) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 4680 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 3900 less Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 3900 less Other Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 3900 less Other Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 3900 less Other Expenses Rent 3000 Advertising 400 3400 Net Profit 1280 Income Statement Revenue $ $ Sales (20 x $500)   10000 less Cost of Goods Sold Cost of Sales (20 x $205 ) 4100 Buying expenses 2000 6100 Gross Profit 3900 less Other Expenses Rent 3000 Advertising 400 3400 Net Profit 500

6. Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO 18.2 Product vs Period Costs Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO Cost is required to bring stock into a condition and location ready for sale Cost CAN be allocated to individual units of stock on a logical basis. Classified as… YES YES YES NO NO YES NO NO PRODUCT COST PERIOD COST OTHER EXPENSE OTHER EXPENSE

7. All costs can be divided into 3 categories : Product Costs vs. Period Costs PRODUCT COST PERIOD COST A cost incurred in order to bring stock into a condition and location ready for sale CAN be allocated to individual units of stock on a logical basis. A cost incurred in order to bring stock into a condition and location ready for sale CAN’T be allocated to individual units of stock because there is no l ogical basis to do so. OTHER EXPENSE All other costs involved in Running the business on a daily basis and G etting stock from the business to the customer

8. task In-class Homework SQ2 X