The following is a list of costs incurred by several businesses. Classify each o

Question

The following is a list of costs incurred by several businesses.

Classify each of the following costs as product costs or period costs. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense:

Costs Classification a. Cost of fabric used by clothing manufacturer b. Maintenance and repair costs for factory equipment c. Rent for a warehouse used to store work in process and finished products d. Wages of production quality control personnel e. Oil lubricants for factory plant and equipment f. Depreciation of robot used to assemble a product g. Travel costs of marketing executives to annual sales meeting h. Depreciation of copying machines used by the Marketing Department i. Fees charged by collection agency on past-due customer accounts j. Electricity used to operate factory machinery k. Maintenance costs for factory equipment l. Pens, paper, and other supplies used by the Accounting Department in preparing various managerial reports m. Charitable contribution to United Fund n. Depreciation of microcomputers used in the factory to coordinate and monitor the production schedules o. Fees paid to lawn service for office grounds upkeep p. Cost of sewing machine needles used by a shirt manufacturer q. Cost of plastic for a telephone being manufactured r. Telephone charges by president’s office s. Cost of 30-second television commercial t. Surgeon’s fee for heart bypass surgery u. Depreciation of tools used in production v. Wages of a machine operator on the production line w. Salary of the vice president of manufacturing operations x. Factory janitorial supplies

Explanation / Answer

Costs Classification Sub classification a product costs direct materials cost b product costs factory overhead cost c period costs administrative cost d product costs direct labor cost e product costs factory overhead cost f product costs factory overhead cost g period costs administrative cost h period costs administrative cost i period costs selling cost j product costs factory overhead cost k product costs factory overhead cost l period costs administrative cost m period costs administrative cost n product costs factory overhead cost o period costs administrative cost p product costs direct material cost q product costs direct material cost r period costs administrative cost s period costs selling cost t product costs direct labor cost u product costs factory overhead cost v product costs direct labor cost w period costs administrative expense x period costs administrative costs

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