Question

Classifying Costs The following is a list of costs that were incurred in the production and sale of lawn mowers. Classify each of the costs as either a product cost or a period cost. 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. Attorney fees for drafting a new lease for headquarter offices b. Cash paid to outside firm for janitorial services for factory c. Commissions paid to sales representatives, based on the number of lawn mowers sold d. Cost of advertising in a national magazine e. Cost of boxes used in packaging lawn mowers f. Electricity used to run the robotic machinery g. Engine oil used in mower engines prior to shipment h. Factory cafeteria employees' wages i. Filter for spray gun used to paint the lawn mowers j. Gasoline engines used for lawn mowers k. Hourly wages of operators of robotic machinery used in production 1. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced m. Maintenance costs for new robotic factory equipment, based on hours of usage n. Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product o. Payroll taxes on hourly assembly line employees p. Plastic for outside housing of lawn mowers 4. Premiums on insurance policy for factory buildings r. Property taxes on the factory building and equipment s. Salary of factory supervisor t. Salary of quality control supervisor who inspects each lawn mower before it is shipped

Answer 1

	Costs	Classification
a	Attorney fee for drafting a new lease for head quarter office	Period Cost , Administrative Expenses
b	Cash paid to outside firm for Jaintorial Service for factory	Product Cost , Factory Overhead Cost
c	Commission paid to sales representative based on the number of lawn mowers sold	Period Cost , Selling Expense
d	Cost of Advertising in a national magzine	Period Cost , Selling Expense
e	Cost of boxes used in packing lawn mowers	Product costs , Direct Material Cost
f	Electricity used to run the robotic machinery	Product costs, Factory Overheads Cost
g	Engine oil used in mower engine prior to shipment	Product costs, Direct Material Cost
h	Factory cafeteria employees wages	Product Cost , Factory Overhead Costs
i	Filter for spray gun used to paint the lawn mower	Product costs, Factory Overhead Cost
j	Gosoline engine used for lawn mowers	Product Cost, Direct Material Cost
k	Hourly wages of operators of robotic machinery used in production	Product costs, Direct Labor cost
l	License fee for use of patent for lawn mower blade , based on the number of lawn mowers produced	Product costs, Factory Overhead Cost
m	Maintenance cost for New robotic factory equipment based on hour of usage	Product Cost, Factory Overhead Cost
n	Paint used to coat the lawn mower the cost of which is immaterial to the cost of the final product	Product Cost, Factory Overhead Cost
o	Payroll taxes on hourly assembly line employees	Product Cost, Direct Material Cost
p	Plastic for outside housing of lawn mowers	Product Cost, Direct Material Cost
q	Premium on insurance policy for factory building	Product Cost, Factory overhead Cost
r	Property taxes on factory building and equipment	ProductCost, Factory overhead Cost
s	Salary of factory supervisor	Product Cost, Factory Overhead Cost
t	Salary of quality control supervisor who inspets each lawn mower before it is shipped	Product Cost, Factory overhead Cost
u	Salary of Vice President of Marketing	Period Cost , Selling Expense
v	Steel used in producing the lawn mowers	Product Cost, Direct Material Cost
w	steering wheels for lawn mowers	Product Cost , Direct Material Cost
x	Stright line depreciation in the robotic machinery used to manufacture the lawn mowers	Product Costs, Factory Overhead Cost
y	Telephone charges for company controllers office	Priod Cost , Administrative Expenses
z	Tires for lawn mowers	Product costs, Direct Material Cost