Selling and administrative costs are costs that are not included in the cost of inventory. There include advertising, salaries of the administrative staff, sales expenses, insurance after the product is on the shelf (as opposed to transit insurance).

Selling and administrative costs and transportation out costs are period costs because unlike product costs, they are matched to the period they incur. Period costs are not added to the cost of inventory.

This ends lesson 7.

Next is lesson 8.