Product Costs: Product Costs mean the direct costs incurred for the production of a product. Product costs include:
Period costs: Period costs are not directly related to the production process of a product. Sales, general, and administrative costs are considered period costs.
| Product costs | Period costs | |
| Direct manufacturing labor | 15,000 | |
| Machine maintenance | 2,000 | |
| Sales commission | 2,000 | |
| Depreciation office equipment | 3,000 | |
| Depreciation plant equipment | 5,000 | |
| Advertising expense | 1,500 | |
| Indirect manufacturing material | 2,500 | |
| Freight in | 2,500 | |
| Machinery power | 2,000 | |
| Direct material used | 20,000 | |
| Accountant salaries | 4,000 | |
| Office building rent | 3,000 | |
| Salesmen salaries | 5,500 | |
| Freight out | 1,000 | |
| Indirect manufacturing labor | 1,000 | |
| Total | 50,000 | 20,000 |