What product costs and period costs go into McDonald’s French fries?

Picture of McDonald's French fries

Source: Wendy Tietz

McDonald’s recently released a video featuring Grant Imahara, a former host from “Mythbusters,” about how its French fries are made.  Some people have said that its French fries are mashed-up potatoes (or other ingredients) pressed into French fry shapes.  To see how the French fries are actually made, see the video at http://time.com/3675518/how-mcdonalds-makes-french-fries/ (5:06 minutes.)

Questions

  1. What is the distinction between product costs and period costs?
  2. Why is it important to sort costs into product costs and period costs?
  3. What are some product costs related to McDonald’s French fries?
  4. What are some period costs related to the manufacture and sale of McDonald’s French fries?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

2 Responses to “What product costs and period costs go into McDonald’s French fries?”

  1. Hi Wendy,

    The reference to the McDonalds video says that the video is private and that you need an authorized sign-in to view? Is there a sign-in we can use?

    Thanks

    Teresa

    • Dr. Wendy Tietz, CPA, CMA, CGMA Reply August 31, 2016 at 11:46 am

      Hi Teresa. That link changed to private since I originally used it. I was able to find another link and have updated the post. Thanks for the heads up! Wendy

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