Period Cost Calculator
Calculate total period cost from your selling expenses and general & administrative expenses. Add optional revenue and gross profit to see period cost as a percentage of revenue and your estimated operating income — with a visual income statement waterfall.
Enter your expenses
Period costs = selling expenses + G&A expenses. Enter each category separately for a full breakdown, or use the optional revenue fields to see the impact on operating income.
Period cost formula
Total period cost = Selling expenses + G&A expenses.
Both categories hit the income statement immediately — never passing through inventory.
Period cost vs product cost
Product costs (direct materials, labor, factory overhead) flow through inventory to COGS. Period costs bypass inventory entirely and reduce net income in the current period.
What are period costs?
Period costs are expenses charged directly to the income statement in the period they are incurred. They are not attached to inventory and cannot be deferred to a future period. Every dollar of period cost reduces net income in the current accounting period, regardless of how many units were produced or sold.
Period costs fall into two broad categories: selling expenses (costs related to generating revenue — advertising, sales salaries, outbound freight) and general & administrative expenses (costs of running the business — executive salaries, office rent, legal fees, admin depreciation).
Period cost formulas
Frequently asked questions
What is a period cost?
A period cost is any expense recognised in the accounting period it is incurred — not attached to inventory. Period costs include selling expenses (advertising, sales salaries, outbound freight) and G&A expenses (executive salaries, office rent, legal fees). They appear on the income statement below gross profit.
Is factory rent a period cost?
No. Factory rent is manufacturing overhead — a product cost that flows through inventory to COGS. Only non-factory rent (head office, sales offices) is a period cost. If a building is shared, split the rent proportionally between product cost and period cost.
Is depreciation a period cost?
It depends on the asset. Depreciation on manufacturing equipment is a product cost (manufacturing overhead). Depreciation on office furniture, company cars, and administrative software is a G&A period cost. The asset's use — not the depreciation method — determines the classification.
What is the difference between period cost and operating expense?
Period costs and operating expenses overlap significantly but are not identical. Period costs specifically refers to the product vs period classification in cost accounting. Operating expenses is a financial reporting term that includes selling expenses and G&A — typically matching period costs — but some operating expense treatments vary by reporting standard and company policy.
Related finance calculators
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Disclaimer
This calculator provides estimates based on the expense inputs you enter. Actual period cost classification depends on your accounting policies, applicable GAAP or IFRS standards, and the specific nature of each expense. Consult a qualified accountant for financial reporting and tax purposes.