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What is the difference between period costs and product costs?

Product costs are costs that go into making a product or service and would include direct material, direct labor, manufacturing overhead, etc. Product costs are capitalized into inventory and expensed when the units are sold. Period costs are unrelated to producing a product and are expensed in the period they are incurred. Examples of period costs include marketing expenses, salaries for the executive team, accounting and legal costs, etc.


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