If the product cost is the manufacturing cost and the period cost is non-manufacturing cost . So why the books make them two different classification?

Dear Mohammed Shah

You now that according to GAAP All manufacturing costs are including in cost of goods sold or incorporate into inventory cost and factory rent is a manufacturing cost . So period costs are selling & administrative expenses .

Thank you any way 

With regards 

The answer of my question is we classified production cost into gross margin and period costs into operating income with gross margin . So sometimes we incorporate production cost with period cost as  operation losses like abnormal spoilage .

Dear Motaz,

How do you say that product cost is the manufacturing cost and the period cost is non-manufacturing cost ?

Period cost can also be a manufacturing cost, like factory rent which is an indirect cost or factory overhead but forms a part of the products cost.

please review your question and let me know.

My regards,

Mohammed

Product cost related to production but period cost related to Time passed. So product cost and period cost are different.

identifying the correct product cost is very important in product pricing, tax calculation, decision making, calculating profitability and for other reasons.