Product Costs Period Costs Direct Materials Direct Labor Factory Overhead Selling Expense Administrative Cost Cost Cost Cost Expense
The following is a list of costs that were incurred in the production and sale of large commercial airplanes:
a. Cost of electronic guidance system installed in the airplane cockpit
b. Special advertising campaign in Aviation World magazine
c. Salary of chief compliance officer of company
d. Salary of chief financial officer
e. Decals for cockpit door, the cost of which is immaterial to the cost of the final product
f. Cost of electrical wiring throughout the airplane
g. Cost of normal scrap from production of airplane body
h. Instrument panel installed in the airplane cockpit
i.
j. Masks for use by painters in painting the airplane body
k. Cost of paving the headquarters employee parking lot
l. Turbo-charged airplane engine
m. Prebuilt leather seats installed in the first-class cabin
n. Human Resources Department costs for the year
o. Hourly wages of employees that assemble the airplane
p. Salary of the Marketing Department personnel
q. Oil to lubricate factory equipment
r. Yearly cost of the maintenance contract for robotic equipment
s. Hydraulic pumps used in the airplane’s flight control system
t. Cost of miniature replicas of the airplane used to promote and market the airplane
u. Metal used for producing the airplane body
v. Power used by painting equipment
w. Annual bonus paid to the chief operating officer of the company
x. Interior trim material used throughout the airplane cabin
y. Salary of plant manager
z. Annual fee to a celebrity to promote the aircraft
Instructions
Classify each cost 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
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