The following are costs associated with manufacturing firms,merchandising firms,

Question

The following are costs associated with manufacturing firms,merchandising firms, or service

firms:

a. Miscellaneous materials used in production

b. Salesperson’s commission in a real estate firm

c. Administrators’ salaries for a furniturewholesaler

d. Administrators’ salaries for a furnituremanufacturer

e. Freight costs associated with acquiring inventories for agrocery store

f. Office manager’s salary in a doctor’soffice

g. Utilities for the corporate offices of a toymanufacturer

h. Line supervisor’s salary for a clothingmanufacturing firm

i. Training seminar for sales staff of a service firm

j. Fuel used in a trucking firm

k. Paper used at a printing business

l. Oil for machinery at a plastics manufacturing firm

m. Food used at a restaurant

n. Windshields used for a car manufacturer

Classify the costs as (1) product or period; (2) variable orfixed; and (3) for those that are

product costs, as direct materials, direct labor, ormanufacturing overhead. Write “not

applicable (N/A)” if a category doesn’tapply.

Explanation / Answer

A. Miscellaneous material used in production - Product cost,variable , direct materials B.Sales person's commissions - Period cost, variable, N/A C.Administrator's salaries (wholesaler)- Period cost, Fixed ,N/A D.Administrator's salaries (Manufacturer) - Period cost, Fixed,manufacturing overhead E.Freight cost to acquire inventories - Product cost , variable,N/A F.Office manager's salary - Period cost, Fixed, N/A G.Utilities for the corporate offices - Period cost, variable,N/A H.Supervisor's salary - Product cost, fixed cost,manufacturingoverhead I.Training seminar for sales staff -Period cost, variable, N/A J Fuel - Product cost, variable, direct materials K.Paper used at printing business - product cost, variable, directmaterials. L.oil at plastic manufacturing - product cost, variable ,manufacturing overhead. M food used at a restaurant - product cost, variable, directmaterials. N. windshields - product cost, variable, directmaterials.

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