Question

In: Accounting

13. Classifying Costs The following is a list of costs incurred by several businesses: Classify each...

13. Classifying Costs 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 raw materials and work in process 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

Solutions

Expert Solution

Classification of cost -

a) Cost of fabric used by clothing manufacturer - Direct material cost.(Product cost)

b)Maintenance and repair costs for factory equipment - Factory overhead cost (Product cost)

C) Rent for a warehouse used to store material and work in progress - Factory Overhead cost (Product cost)

d) Wages of production quality control personnel - Factory Overhead cost (Product cost)

e) Oil lubricants for factory plant and equipment - Factory Overhead (Product Cost)

f) Depriciation of robot used to assemble a product - Factory overhead cost (Product Cost)

g) Travel cost of marketting executives to annual sales meeting - Administrative expense (Period cost)

h) Depriciation of copying machine used by Marketting department - Administrative cost (Period cost)

i) Fess charged by collection agency on past due customer accounts - Administrative expense (Period cost)

j) Electricity used to operate factory machinery - Factory overhead (Product cost)

k) Maintenance cost for factory equipment - Factory Overhead (Product Cost)

l) Pens,Papers and other supplies used by Accounting Department in preparing various managerial report - Administrative expense (Period cost)

m) Charitable contribution to United funds - Administrativ expense (Period cost)

n) Depriciation of micro computers used in a factory to coordinate and monitor the production schedule - Factory overhead (Product cost)

o) Fess paid to lawn service for office ground unkeep - Administratuve expense (Period cost)

p) Cost of sewing machine needles used by a shirt manufacturer - Factory overhead cost (Product cost)

q) Cost of plastic for a telephone being manufactured - Diect material cost (Product cost)

r) Telephone charges by President's office - Administrative expense (Period cost)

s) Cost of 30 second television commercial - Selleing expense (Period cost)

t) Surgeon's fee for heart bypass surgery - Administrative cost (Period cost)

u) Depriciation of tool used in production - Factory overhead (Product cost)

v) Wages of machine operator on production line - Direct labour ecpense (Product cost)

w) Salary of the vice president of manufacturing operation - Administrative expense (Period cost)

x) Factory janitorial supplies - Factory Overhead (Product cost)


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