ECONOMICS

Detailed explanation-1: -Selling expenses such as sales salaries, sales commissions, and delivery expense, and general and administrative expenses such as office salaries, and depreciation on office equipment, are all considered period costs. In a manufacturing company, these costs are often referred to as nonmanufacturing costs.

Detailed explanation-2: -The selling, general, administrative (SG&A) and interest costs of a retailer and/or a manufacturer are not product costs.

Detailed explanation-3: -Product costs are costs that are incurred to create a product that is intended for sale to customers. Product costs include direct material (DM), direct labor (DL), and manufacturing overhead (MOH).

Detailed explanation-4: -Manufacturing overhead does not include any of the selling or administrative functions of a business. Thus, the costs of such items as corporate salaries, audit and legal fees, and bad debts are not included in manufacturing overhead.