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Part $1$

$$Dahlia$,$ Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing weed$$ trimmers:

View the costs.

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Requirements

$1.$

Describe the difference between period costs and product costs.

$2.$

Classify$$ Dahlia, Inc.$\text{'}$s costs as period costs or product costs. If the costs are product$$ costs, further classify as direct$$ materials, direct$$ labor, or manufacturing overhead.

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Part $1$

Requirement $1.$ Describe the difference between period costs and product costs.

$$

Period costs

Product costs

are operating costs that are expensed in the accounting period in which they are incurred.

$$

Period costs

Product costs

are all costs of a product that

$$

GAAP

GAAS

the IRS

the SEC

requires companies to treat as an asset for external financial reporting. These costs are recorded as an asset$($inventory$)$ on the balance sheet until the asset is sold. The cost is then transferred to an expense account $($

$$

Cost of Goods Manufactured

Cost of Goods Sold

Inventory Expense

Product Expense

$)$

on the income statement.