Classifying A payment of cash (or a commitment to pay cash in the future) for th

Question

Classifying A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.Costs

The following is a list of costs that were incurred in the production and sale of lawn mowers. Classify each of the costs as either a The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.product cost or a Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.period cost. Indicate whether each product cost is a The cost of materials that are an integral part of the finished product.direct materials cost, a The wages of factory workers who are directly involved in converting materials into a finished product.direct labor cost, or a All of the costs of producing a product except for direct materials and direct labor.factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense.

Costs Classification a. Premiums on insurance policy for factory buildings b. Tires for lawn mowers c. Filter for spray gun used to paint the lawn mowers d. Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product e. Plastic for outside housing of lawn mowers f. Salary of factory supervisor g. Hourly wages of operators of robotic machinery used in production h. Engine oil used in mower engines prior to shipment i. Salary of vice president of marketing j. Property taxes on the factory building and equipment k. Cost of advertising in a national magazine l. Gasoline engines used for lawn mowers m. Electricity used to run the robotic machinery n. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers o. Salary of quality control supervisor who inspects each lawn mower before it is shipped p. Attorney fees for drafting a new lease for headquarters offices q. Payroll taxes on hourly assembly line employees r. Telephone charges for company The chief management accountant of a division or other segment of a business.controller's office s. Steering wheels for lawn mowers t. Factory cafeteria cashier’s wages u. Cash paid to outside firm for janitorial services for factory v. Maintenance costs for new robotic factory equipment, based on hours of usage w. Cost of boxes used in packaging lawn mowers x. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced y. Steel used in producing the lawn mowers z. Commissions paid to sales representatives, based on the number of lawn mowers sold

Explanation / Answer

Costs Classification a. Premiums on insurance policy for factory buildings Period Cost ,Administerative b. Tires for lawn mowers Product cost,Direct Material c. Filter for spray gun used to paint the lawn mowers Product cost,Direct Material d.   Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product Product cost,Direct Material e. Plastic for outside housing of lawn mowers Product cost,Direct Material f. Salary of factory supervisor Period Cost,Direct Labour g. Hourly wages of operators of robotic machinery used in production Product cost , direct labour h. Engine oil used in mower engines prior to shipment Product cost,Direct Material i. Salary of vice president of marketing Period cost,Selling expenses j. Property taxes on the factory building and equipment Product cost,Factory overhead k. Cost of advertising in a national magazine Product Cost ,Factory overhead l. Gasoline engines used for lawn mowers Product cost , Direct material m. Electricity used to run the robotic machinery Product cost, Factory Overhead n. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers Product cost,Factory overhead o. Salary of quality control supervisor who inspects each lawn mower before it is shipped Period cost,Selling expenses p. Attorney fees for drafting a new lease for headquarters offices q. Payroll taxes on hourly assembly line employees Period Cost ,Administerative r. Telephone charges for company The chief management accountant of a division or other segment of a business.controller's office Period cost,Administerative s. Steering wheels for lawn mowers Product cost,Direct Material t. Factory cafeteria cashier’s wages Product cost,Factory overhead u. Cash paid to outside firm for janitorial services for factory Product cost,Factory overhead v. Maintenance costs for new robotic factory equipment, based on hours of usage Product cost,Factory overhead w. Cost of boxes used in packaging lawn mowers Product cost,Factory overhead x. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced Product cost,Factory overhead y. Steel used in producing the lawn mowers Product cost,Direct Material z. Commissions paid to sales representatives, based on the number of lawn mowers sold Period Cost ,Selling Expenses Note: For financial reporting purposes,cost are classified as product cost and period cost. Product Cost: Product cost consist of manufacturing cost like direct material,direct labour and factory overhead. Period cost:consist of selling and administerative expenses

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