Financial Education - Technical aspects to determine the relationship with the cost of production

Hello community, continuing with my line of accounting topics, today it is the turn of period costs and cost elements, well period costs are those that are not directly or indirectly related to the product, they are not inventoried, they are characterized by being canceled immediately they are originated, since no relationship with the cost of production can be determined.

The cost elements of a product or its components are direct materials, direct labor and indirect manufacturing costs, this classification provides the necessary information for the measurement of income and the pricing of the product.

It is worth saying that among these elements are materials, which are the main resources used in production; these are transformed into finished goods with the help of labor and indirect manufacturing costs.

Direct costs are all those that can be identified in the manufacture of a finished product, are easily associated with it and represent the main cost of materials in the production of a product.

Finally, indirect costs are those that are involved in the production of a product, but have a relative relevance to direct costs.