In: Accounting
PROBLEM
I
INSTRUCTIONS
Classify each cost as either a product cost or period cost. Indicate whether each product cost is a direct material cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense.
The following is a list of costs that we incurred in the production and sales of boats:
Product cost | Period cost | ||||
Direct material cost | Direct labor cost | Factory overhead cost | selling expense | administrative expense | |
a. Cost of metal hardware for boats, such as ornaments and tie down grasps. | ? | ||||
b. Power used by sanding equipment | ? | ||||
c. Yearly cost of maintenance contract for robotics equipment | ? | ||||
d. Premiums on business interruption insurance in case of natural disaster. | ? | ||||
e. Cost of normal scrap from defective hulls. | ? | ||||
f. Masks for use by sanders in smoothing boat hull. | ? | ||||
g. Cost of paving the employee parking lot. | ? | ||||
h. Hourly wage of assembly line workers. | ? | ||||
i. Oil to lubricate factory equipment. | ? | ||||
j. Straight line depreciation on factory equipment. | ? | ||||
k. Wood paneling for use in interior boat rim. | ? | ||||
l. Commission to sales representatives, based upon the number of boats sold. | ? | ||||
m. Steering wheels. | ? | ||||
n. Special advertising campaign in Bass World. | ? | ||||
o. Cost of boat fro “grand prize” promotion in local bass tournament. | ? | ||||
p. Membership for key executives in the Bass World Association. | ? | ||||
q. Navigation and fishing instruments for boats. | ? | ||||
r. Cost of electrical wiring for boats. | ? | ||||
s. Executives’ end-of-year bonuses. | ? | ||||
t. Salary shop supervisor. | ? | ||||
u. Decals for boat hulls. | ? | ||||
v. Annual fee for Jim Bo Wilks, a famous fisherman to promote the boats. | ? | ||||
w. Legal department cost for the year. | ? | ||||
x. Paint for boats. | ? | ||||
y. Salary of president of the company. | ? | ||||
z. Fiberglass for producing the boat hull. | ? |