The following costs items relate to the operations of Canoe Company. Classify ea

Question

The following costs items relate to the operations of Canoe Company. Classify each as a produce cost or a period cost by placing and “X” in the appropriate column. Also, for those costs that are classified as product costs, indicate whether they should be classified as direct or indirect costs.

    Product Period

                             Costs   Costs Direct Indirect

Sales Commissions             _____   _____   _____   _____

Expired insurance-factory     _____   _____   _____   _____

Sales salaries               _____   _____   _____   _____

Office supplies              _____   _____   _____   _____

Supervisory salaries-factory _____   _____   _____   _____

Factory utilities             _____   _____   _____   _____

Shipping to customers         _____   _____   _____   _____

Office Salaries              _____   _____   _____   _____

Small tools- written off      _____   _____   _____   _____

Explanation / Answer

Sales Commissions:             It is a period cost. It is indirect.

Expired insurance-factory: It is a period cost. It is indirect.

Sales salaries:               It is a period cost. It is indirect.

Office supplies:   It is a period cost. It is indirect.          

Supervisory salaries-factory : It is product cost. It is indirect.

Factory utilities             It is product cost. It is direct.

Shipping to customers  It is product cost. It is indirect.

Office Salaries:           It is a period cost. It is indirect.            

Small tools- written off : It is a product cost. It is indirect.          

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