Question

1. Classifying A payment of cash (or a commitment to pay cash in the future) for the purpose of generating revenues.Costs

   The following is a list of costs incurred by several businesses. Classify each of the following costs as The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.product costs or Those costs that are used up in generating revenue during the current period and that are not involved in manufacturing a product, such as selling, general, and administrative expenses.period costs. Indicate whether each product cost is a The cost of materials that are an integral part of the finished product.direct materials cost, a The wages of factory workers who are directly involved in converting materials into a finished product.direct labor cost, or a All of the costs of producing a product except for direct materials and direct labor.factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense.

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