Classifying period costs and product costs Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers: Handle and shaft of edger Motor of edger Factory labor for workers assembling edgers Lubricant used on bearings in the edger (not traced to the product)  Glue to hold the housing together Plant janitorial wages Depreciation on factory equipment Rent on plant Sales commissions Administrative salaries Plant utilities Shipping costs to deliver finished edgers to customers Requirements Describe the difference between period costs and product costs. Classify Langley’s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.

The costs listed below are related to a manufacturer of all-natural ice cream.  Indicate whether the costs are direct materials (DM), direct labor (DL) or overhead (OH). factory supervisor's salary sugar machine oil for mixing machines   machine operator wages

Accounting Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging Using the following information, determine the overhead rates and the actual cost assigned for each of the…

2. Controllable vs. Non-Controllable Costs, Direct vs. Indirect Costs The supervisor of the PAINTING DEPARTMENT of Honda Cars is in-charge of (1) purchasing supplies, (2) authorizing repairs, and (3) hiring labor for the department. Various costs are given: A) Sales, salaries and commission B) Salary, supervisor of Painting department C) Factory heat and light D) General office salaries E) Depreciation, factory F) Supplies, Painting department G) Repairs and maintenance, Painting department H) Factory insurance I) Labor costs, Painting department J) Salary of factory supervisor ABCDE P 60,000 50,000 40,000 30,000 20,000 10,000 20,000 30,000 40,000 50,000 TOTAL COSTS Α F G H I J REQUIRED: Determine the following: 1. Total costs controllable by the supervisor of the Painting department. 2. Total costs directly identified with the Painting department. 3. Total costs allocated to the factory departments. 4. 1 X X X X X ✓ ✓ X ✓ X 2 3 On the basis of the answers above, which is a FALSE…

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Gala Company is a manufacturer of laptop computers. Various costs and expenses associated with its operations are as follows. The company intends to classify these costs and expenses into the following categories: direct materials, direct labor, manufacturing overhead, and period costs. For each item, indicate the cost category to which it belongs. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Property taxes on the factory building. Production superintendents' salaries. Memory boards and chips used in assembling computers. Depreciation on the factory equipment. Salaries for quality control inspectors. Sales commissions paid to sell laptop computers. Electrical components used in assembling computers. Wages of workers assembling laptop computers. Soldering materials used on factory assembly lines. Salaries for the night security guards for the factory building. Category

Which one of the following costs would not be inventoriable? Production electric bill Wages of forklift driver loading finished product onto delivery vans Plastic gloves worn by assembly line workers Wages of maintenance workers in a factory

A car manufacturer incurs the following costs. Classify each cost as either a product or period cost. If a product cost, classify it as direct materials, direct labor, or factory overhead. If a period cost, classify it as a selling expense or a general and administrative expense. Costs Rent on factory building Steering wheels used in cars Property taxes on office building Office building insurance used up Factory electricity Advertising Depreciation on factory machine Batteries for electric cars Steel for cars Leather for car seats Cost Classification.

Which of the following costs is best classified as a fixed cost with respect to volume of activity? (See your Chapter 20 notes, page 5)  Direct labor Electricity used to heat, light, and cool a factory Cleaning supplies used in an automobile assembly plant Straight-line depreciation expense of a machine used in a factory Total cost of salaries paid to quality inspectors in a manufacturing plant Tires used in an automobile manufacturing plant