Period Cost

Period costs are costs indirectly related to the acquisition or production of goods. Costs such as selling expenses and, under normal conditions, general and administrative expenses are not considered part of the cost Inventory
But conceptually, this burden is the cost of the product as well as the initial purchase price and transport costs. Then why these costs are not considered part of the cost of inventory? Selling expenses are generally considered to be more related to cost of goods sold rather than the inventory that has not sold. However, in most cases. Such other costs especially administrative expenses, is not related or indirectly related to the production process so that the allocation of such costs to cost of inventory will be the arbitrator.
The interest cost is the cost of other periods. Interest costs berhubungandenga preparation to be ready for sale inventory is usually charged when incurred. Advocates of this approach argue that the interest expense is the cost of financing. However, the parties argue that the interest expense incurred to finance activities related to the creation and the transport of supplies to the condition and location ready to sell an asset such as the cost of materials, labor, and overhead, and should therefore be capitalized.


FASB determined that the interest costs associated with the assets created for internal use or assets produced as a special project for sale or dilease should be capitalized. FASB emphasized that this particular project took a long time, large-scale spending, and the likelihood will involve significant interest expense. Interest costs associated with supplies that are routinely manufactured or produced in large qualities repeatedly should not be capitalized, because the benefits are not in accordance with the cost.