QUESTION 1 4 points Which of the folowing is an example of a period cost? O Fabr
ID: 2408959 • Letter: Q
Question
QUESTION 1 4 points Which of the folowing is an example of a period cost? O Fabric used to produce men's pants. O Advertising cost for a new product campaign. O Factory supervisor's salary. O Monthly depreciation of production equipment QUESTION 2 4 points The salary of the president of a manufacturing company would be classified as which of the following? O Product cost O Period cost O Manufacturing overhead O Direct labor 4 points QUESTION 3 Which of the following costs is not a component of manufacturing overhead? O Indirect materials O Factory utilities O Factory equipment O Indirect labor. Property taxes on the manufacturing plantExplanation / Answer
1) Answer: Advertising costs for new product campaign.
Fabric used in men's pant forms a part of direct material cost and shall not be periodic in nature. Similarly the supervisor salary and depreciation is not periodic cost it relates to the entire year and reccuring in nature.
2) Answer: Period cost
The salary of president of the manufacturing company shall be classified as a period cost as it cannot be capitalized. It is associated with the passage of time. It cannot be classified as product cost since there is no product produced by him directly and it cannot be classified as direct cost since the president works for the entire company in which several products shall be produced and his salary cannot be a direct cost to a single product. It cannot be a manufacturing overhead also.
3) Answer: Factory equipment
Factory equipment cannot be a part of manufacturing overhead since it shall be capitalized and depreciation shall be claimed on it.
Factory overhead shall contain indirect material, factory utilities, indirect labour, property taxes on manufacturing plant and other indirect costs.
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