Product costs are defined as:

Product costs are defined as inventoriable costs, which means they are costs that are capitalized as inventory on the balance sheet until the products are sold. This encompasses all costs that are directly associated with the production of goods, including direct materials, direct labor, and manufacturing overhead. Since product costs are linked to the production process, they remain on the balance sheet as inventory until an item is sold, at which point these costs move to the income statement as cost of goods sold.

In contrast to product costs, period costs are expenses that are not tied to the production of goods and are instead expensed on the income statement in the period incurred. Examples of period costs include selling, general, and administrative expenses. Variable costs refer specifically to costs that fluctuate with the level of production, but product costs can include both fixed and variable elements. Finally, while all manufacturing costs are included in product costs, the emphasis on "inventoriable" highlights the key aspect of how these costs are treated in accounting, differentiating them from costs that are expensed immediately in the accounting period.