Question

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.

Advertising expense	$	29,500
Depreciation expense—Office equipment		8,250
Depreciation expense—Selling equipment		10,900
Depreciation expense—Factory equipment		38,150
Factory supervision		104,460
Factory supplies used		11,350
Factory utilities		35,700
Direct labor		708,000
Indirect labor		64,800
Miscellaneous production costs		8,875
Office salaries expense		67,950
Raw materials purchases*		985,000
Rent expense—Office space		23,800
Rent expense—Selling space		27,000
Rent expense—Factory building		79,600
Maintenance expense—Factory equipment		39,000
Sales		4,512,500
Sales salaries expense		409,360

*Assume that the raw materials inventory account is used only for direct materials. Indirect materials are recorded in a factory supplies account.

Required:
Classify each of the costs as either a product or period cost. Then, classify each of the product costs as either direct materials, direct labor, or factory overhead and each of the period costs as either selling or general and administrative expenses. (Leave no cell blank.)

Answer 1

Advertising expense	period cost	Selling
Depreciation expense - office equipment	period cost	Administrative
Depreciation expense - selling equipment	period cost	Selling
Depreciation expense - factory equipment	Product cost	factory overheads
factory supervision	Product cost	factory overheads
Factory supplies used	Product cost	factory overheads
Factory utilities	Product cost	factory overheads
Direct labor	Product cost	direct labor
Indirect labor	Product cost	factory overheads
Misc. production costs	Product cost	factory overheads
Office salaries expense	period cost	Administrative
Raw material purchase	Product cost	direct material
Rent expense - office space	period cost	Administrative
Rent expense - selling space	period cost	Selling
Rent expense - Factory building	Product cost	factory overheads
Maintenance expense- factory equipment	Product cost	factory overheads
Sales
Sales salaries expense	period cost	Selling