Linkage between these costs and individual sales is difficult to establish
Subject : Business
Question: The statement, “linkage between these costs and individual sales is difficult to establish,” refers to
Multiple Choice
A) Expired costs.
B) Product costs.
C) Period costs.
D) Traceable costs.
Expert Verified Solution:
The correct answer is:
C) Period costs.
Explanation:
The statement “linkage between these costs and individual sales is difficult to establish” refers to period costs. Period costs are expenses that are not directly tied to the production of goods or services and cannot be easily allocated to specific products or sales. Instead, they are incurred over time and are expensed in the period in which they are incurred. Examples include administrative salaries, rent, and utilities.
In contrast:
A) Expired costs refer to costs that have been used up and are no longer relevant to future periods, but this term is less commonly used in accounting compared to period costs.
B) Product costs are directly tied to the production of goods and can be allocated to individual products.
D) Traceable costs are costs that can be directly attributed to a specific segment, product, or department.
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