Exercise 10-2 Identifying product versus selling, general, and administrative (SG&A) costs LO 10-2 Required Indicate whether...

Exercise 10-2 Identifying product versus selling, general, and administrative (SG&A) costs LO 10-2 Required Indicate whether each of the following costs should be classified as a product cost or as an Selling, general, and administrative cost cost in accordance with GAAP: Direct materials used in a manufacturing company. Indirect materials used in a manufacturing company. Salaries of employees working in the accounting department. Commissions paid to sales staff. Interest on the mortgage for the company’s corporate headquarters. Indirect labor used to manufacture inventory. Attorney’s fees paid to protect the company from frivolous lawsuits. Research and development costs incurred to create new drugs for a pharmaceutical company. The cost of secretarial supplies used in a doctor’s office. Depreciation on the office furniture of the company president.

Solutions

Expert Solution

1. Direct materials used in a manufacturing company. - - - Product Cost

2. Indirect materials used in a manufacturing company. - - - Product Cost

3.Salaries of employees working in the accounting department - - -Selling, General and Administrative Cost

4. Commissions paid to sales staff. - - - Selling General and Administrative Cost

5.Interest on the mortgage for the company’s corporate headquarters - - - Selling General and Administrative Cost

6.Indirect labor used to manufacture inventory--- Product Cost

7. Attorney’s fees paid to protect the company from frivolous lawsuits. - - - Selling General and Administrative Cost

8. Research and development costs incurred to create new drugs for a pharmaceutical company. - - - Selling General and Administrative Cost

9. The cost of secretarial supplies used in a doctor’s office. - - - Selling General and Administrative Cost

10. Depreciation on the office furniture of the company president. - - - Selling General and Administrative Cost

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