Question

1. (4 points) Stony Electronics Corporation manufactures a portable radio designed for mounting on the wall of the bathroom. The following list represents some of the different types of costs incurred in the manufacture of these radios: 1. The plant manager's salary. 2. The cost of heating the plant. 3. The cost of heating executive offices. 4. The cost of printed circuit boards used in the radios. 5. Salaries and commissions of company salespersons. 6. Depreciation on office equipment used in the executive offices. 7. Depreciation on production equipment used in the plant. 8. Wages of janitorial personnel who clean the plant. Required: Classify each of the items above as product inventoriable) cost or period (noninventoriable) cost for the purpose of preparing external financial statements.

Answer 1

Costs incurred for manufacture of product and all costs related to factory and plant are product(inventoriable) cost.

Costs incurred for selling and administrative purposes are period (noninventoriable) cost.

1	The plant manager's salary	Product(inventoriable) cost
2	The cost of heating the plant.	Product(inventoriable) cost
3	The cost of heating executive offices	Period (noninventoriable) cost
4	The cost of printed circuit boards used in the radios	Product(inventoriable) cost
5	Salaries and commissions of company salespersons.	Period (noninventoriable) cost
6	Depreciation on office equipment used in the executive offices	Period (noninventoriable) cost
7	Depreciation on production equipment used in the plant	Product(inventoriable) cost
8	Wages of janitorial personnel who clean the plant	Product(inventoriable) cost