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Period & Product cost & Other expenses

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costargh:
I'm doing exambusters and I did a question and I disagree with the answer.
Tell me what you think.

...
"Free delivery is offered to customers"
...
"Cost of delivery to customers: $5 per unit plus $0.50 GST"

2.3 Justify your treatment of the cost of delivery to customers.

My answer:
The cost of delivery is neither a product or period cost; it is classified as an 'other expense'.  This is because cost of delivery to customers is a selling expense and thus, is not incurred to get the stock into a location and condition ready for sale.


Their answer:

This cost is a selling cost, which may be incurred when the goods are actually sold to the customers. It is not a cost incurred in buying the stock item and therefore it should be treated as a period cost, not a product cost <----- WTF

My understanding
Product and period costs= buying expenses, costs incurred to get stock into a location and condition ready for sale

Other expenses= other costs such as advertising and delivery to customers

This question in exambusters was adapted from 2004 VCAA exam 2, 2.4.4
Here is VCAA answer:

Justification: The cost of delivery to customers is a selling cost. Not part of the cost of getting the goods
ready for sale.

Please tell me they are wrong, or else I have a major flaw in my understanding of this area of study.

Noblesse:
I understand that delivery expenses are not period or product costs, but selling expenses. Fairly sure exambusters are wrong - wouldn't be the first time.

sheepz:
Yeah I'm pretty sure period and product costs both relate to COGS and the cost of delivering to customers is not one of these but other expense ie costa you're right

costargh:
Thanks guys

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