Question

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. Salary of quality control supervisor
b. Packing supplies for products sold. These supplies are a very small portion of the total cost of the product.
c. Factory operating supplies
d. Depreciation of factory equipment
e. Hourly wages of warehouse laborers
f. Wages of company controller’s secretary
g. Maintenance and repair costs for factory equipment
h. Paper used by commercial printer
i. Entertainment expenses for sales representatives
j. Protective glasses for factory machine operators
k. Sales commissions
l. Cost of hogs for meat processor
m. Cost of telephone operators for a toll-free hotline to help customers operate products
n. Hard drives for a microcomputer manufacturer
o. Lumber used by furniture manufacturer
p. Wages of a machine operator on the production line
q. First-aid supplies for factory workers
r. Tires for an automobile manufacturer
s. Paper used by Computer Department in processing various managerial reports
t. Seed for grain farmer
u. Health insurance premiums paid for factory workers
v. Costs of information technology support for the corporate headquarters
w. Costs for television advertisement
x. Executive bonus for vice president of marketing

Answer 1

Costs	Classification
a. Salary of quality control supervisor	Product costs-factory overhead cost
b. Packing supplies for products sold. These supplies are a very small portion of the total cost of the product	Product costs-factory overhead cost
c. Factory operating supplies	Product costs-factory overhead cost
d. Depreciation of factory equipment	Product costs-factory overhead cost
e. Hourly wages of warehouse laborers	Product costs-factory overhead cost
f. Wages of company controller's secretary	Period costs-administrative expense
g. Maintenance and repair costs for factory equipment	Product costs-factory overhead cost
h. Paper used by commercial printer	Product costs-direct materials cost
i. Entertainment expenses for sales representatives	Period costs-selling expense
j. Protective glasses for factory machine operators	Product costs-factory overhead cost
k. Sales commissions	Period costs-selling expense
l. Cost of hogs for meat processor	Product costs-direct materials cost
m. Cost of telephone operators for a toll-free hotline to help customers operate products	Period costs-selling expense
n. Hard drives for a microcomputer manufacturer	Product costs-direct materials cost
o. Lumber used by furniture manufacturer	Product costs-direct materials cost
p. Wages of a machine operator on the production line	Product costs-direct labor cost
q. First-aid supplies for factory workers	Product costs-factory overhead cost
r. Tires for an automobile manufacturer	Product costs-direct materials cost
s. Paper used by Computer Department in processing various managerial reports	Period costs-administrative expense
t. Seed for grain farmer	Product costs-direct materials cost
u. Health insurance premiums paid for factory workers	Product costs-direct labor cost
v. Costs of information technology support for the corporate headquarters	Period costs-administrative expense
w. Costs for television advertisement	Period costs-selling expense
x. Executive bonus for vice president of marketing	Period costs-selling expense