Depreciation on production equipment is a manufacturing cost, but depreciation on the warehouse in which products are stored after being manufactured is a period cost.
Additionally, is Office Depreciation a product cost? Examples of product costs are direct materials, direct labor, and allocated factory overhead. Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities. Product costs are sometimes broken out into the variable and fixed subcategories.
Herein, what type of cost is depreciation on office equipment?
Depreciation is a fixed cost, because it recurs in the same amount per period throughout the useful life of an asset. Depreciation cannot be considered a variable cost, since it does not vary with activity volume. However, there is an exception.
Is depreciation of office equipment an administrative expense?
Building rent, insurance, subscriptions, utilities, and office supplies may be classified as either a general expense or an administrative expense. Depending on the asset being depreciated, depreciation expense may be classified as a general, administrative, or selling expense.