Insurance expense incurred on a factory building would be treated as a a. direct cost b. period cost c. product cost d. selling cost

b. Period cost

Explanation:

Insurance expense paid on the factory building is an indirect overhead, since this is not directly attributable to a product it cannot be a direct cost and expanding the logic, it cannot not be a product cost.

Since insurance is not directly related to any selling activity, it cannot be a selling cost. In fact, selling overheads themselves can be categorized as period costs.

Period costs are those costs that are identified by a period of time rather than the selling or production of a product, and since, insurances are paid period wise(yearly, quarterly etc), it is indeed a period cost.

Hope that helps.

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