period cost
Financial Dictionary — Cost Accounting
Definition
Period cost is a cost that is not related to generating revenue, such as the production of goods or services that are sold, but it causes revenue to be achieved, such as general expenses and others, and is charged as period expenses to reach net income.
Use cases, Example & Why it matters
Use cases
- Used in product/service costing, budgeting, and variance analysis.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.
- Used to support pricing decisions and profitability analysis by cost behavior and drivers.
Example
- Example: The costing team uses **period cost** to allocate costs and analyze margins by product line.
Why it matters
- Why it matters: Improves cost accuracy, supports better pricing and budgeting, and strengthens performance measurement.