Question

PUARUARY 2) ABC Company makes wooden furniture. Identify each of the following as either an inventoriable product cost or a period cost. If it is an inventoriable product cost, classify it as direct materials, direct labor, or manufacturing overhead. A. Insurance on the plant building B. Cost of shipping the furniture to the customers C. Assembly line workers' wages D. Depreciation on plant equipment E. Salesmen's salaries F. Cost of various types of wood G. Insurance on delivery trucks H. Plant forklift operator's salary for Greek Food Producers is presented in the

Answer 1

Solution	Particulars	Inventoriable(product) or period cost	Reason
A	Insurance on the plant building	Inventoriable cost(manfacturing overheads)	Costs associated with running the plants are considered manufacturing overhead costs. These costs include depreciation on machinery and the building, utilities, property taxes, insurance on the building, and repairs and maintenance on the building and machinery.
B	Cost of shipping the furniture to the customers	Period cost	Selling costs are period costs,This includes the cost of sales people, sales commissions, marketing, advertising, and distribution of your product.
C	Assembly line worker's wages	Inventoriable cost(Direct labour)	Direct labor costs are the wages, benefits, and insurance that are paid to employees who are directly involved in manufacturing and producing the goods – for example, workers on the assembly line or those who use the machinery to make the products.
D	Depriciation on plant equipment	Inventoriable cost (manfacturing overheads)	Costs associated with running the plant are also considered manufacturing overhead costs. These costs include depreciation on machinery and the building etc.
E	Salesman salarie's	Period cost	Selling costs are period costs,This includes the cost of sales people, sales commissions, marketing, advertising ettc.
F	Cost of various types of woods	Inventoriable cost(Direct material)	Direct material costs are the costs of raw materials or parts that go directly into producing products. Abc company make wooden furniture so wood considered as Direct material.
G	Insurance on delivery truck	Period cost	The Insurance on the trucks used to deliver products to customers is a period cost.
H	Plant forklift operators salary	Inventoriable cost(manfacturing overheads)	Material handlers (forklift operators who move materials and units) it related to mmanfacturing activity it is treated as manfacturing overheads.