Lake Company sells Toe bags through agents who are paid a commission on each bag sold . For financial II accounting purposes, these commissions are classified as a(an) __ A. Prime cost B. Product cost OC . Fixed cost D. Period cost

Question

Lake Company sells Toe bags through agents who are paid a commission on each bag sold . For financial II accounting purposes, these commissions are classified as a(an) __ A. Prime cost B. Product cost OC . Fixed cost D. Period cost

Answer 1

The correct answer is D. Period cost.Commissions paid to agents on each bag sold are considered a period cost. Period costs are expenses that are not directly tied to the production process and are expensed in the period in which they are incurred. In this case, the commissions are not a part of the manufacturing process and are expensed as incurred.

Question

Lake Company sells Toe bags through agents who are paid a commission on each bag sold . For financial II accounting purposes, these commissions are classified as a(an) __ A. Prime cost B. Product cost OC . Fixed cost D. Period cost

Solution

Resposta