Is depreciation always considered a period cost?
1 TRUE Depreciation is a period cost as it is charged on yearly basis.
Is R&D OPEX or capex?
Research and development expenses are designed to generate future growth and should be treated as capital expenditures.
Is period cost the same as fixed cost?
In general, the variable cost is considered as product cost because they change with the change in the activity level. Conversely, the fixed cost is regarded as period costs because they remain unchanged irrespective of the activity level.
What cost is insurance?
The cost of insurance charges are monthly charges for mortality, administration, and other aspects of expenses on the part of the life insurance company. They are assessed against the life insurance policy based on the insured’s attained age, the original rating class, and the current net amount at risk.
Is insurance a fixed manufacturing overhead?
Fixed manufacturing overhead incurred is that component of factory overhead that does not vary with production volume. Examples of these costs are depreciation, the salaries of production managers, and insurance for the production facility.
Is insurance expense a variable expense?
Examples of Fixed Expenses Loan payments, such as auto loans or student loans. Insurance premiums, such as for car insurance and homeowners insurance. Property taxes.
Is life insurance a fixed or variable?
Whole life insurance policies have a fixed premium, meaning you need to pay the same amount each year. Whole life insurance also provides steady, fixed growth on your cash value.
What are fixed and variable costs?
Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).
Is life insurance a fixed asset?
The death benefit of a life insurance policy is not considered an asset, but some policies have a cash value, which is considered an asset. Only permanent life insurance policies, like whole life, can grow cash value.
What is non variable insurance?
A non-variable policy means that your monthly premium payments are only covering the expense of the insurance. With a variable policy, your payments are higher and cover both the premium and the expense of additional investments.
Is factory maintenance a period cost?
Repairs to office equipment are period costs. That is, the cost of the repairs to office equipment will be reported as a selling, general and administrative (SG&A) expense in the period in which the repairs take place. Repairs to factory equipment are not period costs.
What are the 2 types of period costs?
Period costs are any costs a company incurs indirectly related to the product development and production process. Period costs can be divided into two categories: selling and administrative costs.
Is period cost the same as operating expenses?
Operating expenses, like selling and administrative expenses, make up the bulk of your period costs. Loan interest payments and depreciation are also periodic expenses. Period costs can be found in the expense section of the income statement.
What are insurance costs called?
The amount you pay for your health insurance every month.
Is insurance a fixed or variable cost?
Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments.
Is insurance a fixed assets?
Insurance, on the whole, is attached to fixed assets and becomes a part of fixed assets, hence it is considered a fixed asset.
What is a variable cost for an insurance company?
Explanation: An expense for the company that varies according on how much is produced or sold is called a variable cost. An expense that fluctuates in relation to production output is referred to as a variable cost. Depending on a company’s production volume, variable costs rise or fall.
Is salary a variable cost?
An employee’s salary would be considered a fixed cost, while sales commissions are variable. While fixed costs do change over a long-term period, this change isn’t related to production. For example, an employee might receive a raise in their salary after an annual review.
What is variable insurance?
Variable life insurance includes a cash value component whose value changes based on: Amount of premiums paid. Fees and expenses charged by the insurance company. Performance of the investments (often similar to mutual funds) tied to the policy. Loans or withdrawals taken from cash value by the policyholder.
What are fixed cost in an insurance company?
Fixed cost refers to the cost of a business expense that doesn’t change even with an increase or decrease in the number of goods and services produced or sold. Fixed costs are commonly related to recurring expenses not directly related to production, such as rent, interest payments, and insurance.