Question

Test Company makes ice cream flavored with a variety of fruits and nuts. The following costs were incurred last month. Management’s objective is to determine a product cost for external financial reporting purposes. Classify each cost as either product or period cost. Also, classify each cost as direct materials, direct labor, overhead, selling, or administrative.

For the first blank answer: product or period

For blank second blank answer: direct materials, direct labor, overhead, selling, or administrative

Example:

The cost of cream used in the ice cream would be ______ and ________.

Answers:

product

direct materials

Wages for workers who operate the machinery to mix the ice cream would be _______and ________.

Rent for the corporate office building would be _______and ________.

The cost for a national radio advertisemen would be _______and ________

the cost of pecans used in pecan praline flavored ice cream would be _______and ________.

The cost of lubricants to maintain the machinery used to mix the ice cream would be _______and ________.

The salary for the factory supervisor would be _______and ________.

Fuel cost for the delivery truck used to transport ice cream to grocery stores would be _______and ________.

The salary of the chief financial officer (CFO) would be _______and ________.

Wages for the security guard at the factory would be _______and ________.

Salary for the sales manager would be _______and ________.

Answer 1

1. The cost of cream used in the ice cream would be ______ and ________.
product, direct materials

2. Wages for workers who operate the machinery to mix the ice cream would be _______and ________.
product, direct labor

3. Rent for the corporate office building would be _______and ________.
Period, administrative

4. The cost for a national radio advertisemen would be _______and ________
Period, Selling

5. the cost of pecans used in pecan praline flavored ice cream would be _______and ________.
Product, direct material

6. The cost of lubricants to maintain the machinery used to mix the ice cream would be _______and ________.
Product, overhead

7. The salary for the factory supervisor would be _______and ________.
Product, overhead

8. Fuel cost for the delivery truck used to transport ice cream to grocery stores would be _______and ________.
Period, Selling

9. The salary of the chief financial officer (CFO) would be _______and ________.
Period, administrative

10. Wages for the security guard at the factory would be _______and ________.
Product, overhead

11. Salary for the sales manager would be _______and ________.
Period, Selling