The following is a list of costs that were incurred in theproduction and sale of
ID: 2457754 • Letter: T
Question
The following is a list of costs that were incurred in theproduction and sale of boats:
a. Commissions to salesrepresentatives, based upon the number of boats sold.
b. Cost of boat for “grandprize” promotion in local bass tournament.
c. Memberships for keyexecutives in the Bass World Association.
d. Cost of electrical wiring forboats.
e. Cost of normal scrap fromdefective hulls.
f. Cost of metal hardwarefor boats, such as ornaments and tie-down grasps.
g. Cost of paving the employeeparking lot.
h. Hourly wages of assembly lineworkers.
i. Annual bonus paidto top executives of the company.
j. Straight-linedepreciation on factory equipment.
k. Wood paneling for use ininterior boat trim.
l. Steeringwheels.
m. Special advertising campaign in BassWorld.
n. Masks for use by sanders insmoothing boat hulls.
o. Power used by sandingequipment.
p. Yearly cost maintenancecontract for robotic equipment.
q. Oil to lubricate factoryequipment.
r. Canvas top forboats.
s. Executive end-of-yearbonuses.
t. Salary of shopsupervisor.
u. Decals.
v. Annual fee to pro-fisherman JimBo Wilds to promote the boats.
w. Paint for boats
x. Legal department costs for theyear.
y. Fiberglass for producing theboat hull.
z. Salary of president ofcompany.
Instructions:
Classify each cost as either a product cost or a periodcost. Indicate whether each product cost is a direct materialscost, a direct labor cost, or a factory overheadcost. Indicate whether each period cost is a selling expenseor an administrative expense. Use the following tabularheadings for your answer, placing an “X” in theappropriate column.
ProductCosts Period Costs
Direct Direct Factory Selling Administrative
Materials Labor Overhead Expense Expense
Cost Cost Cost Expense
Explanation / Answer
Productcosts Period costs DMcost DL cost O/H exp Selling exp. Admin.exp a. x b x c x d. x e. x f. x g. x h. x i x j. overhead k D.materials l D.materials m selling exp. n overhead exp. o. overhead exp. p Admin exp. q. Overhead expense r.Direct materials. s Admin. exp t selling exp. u .D.material v. selling exp. w overhead exp. x Admin exp. y D. materials z.Admin. exp
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