Identify whether each of the following is classified as a product cost or a period cost. ______________ 1. Direct labor ______________ 2. Direct materials ______________ 3. Factory utilities ______________ 4. Repairs to office equipment ______________ 5. Property taxes on factory building ______________ 6. Sales salaries

Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 11E: Classify each of the following items of factory overhead as a(n) unit-level, batch-level,...
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Question#1

1. Identify whether each of the following is classified as a product cost or a period cost.
______________ 1. Direct labor
______________ 2. Direct materials
______________ 3. Factory utilities
______________ 4. Repairs to office equipment
______________ 5. Property taxes on factory building
______________ 6. Sales salaries

Question#2

 Indicate whether each of the following costs of a pencil manufacturer would be classified as direct materials (DM), direct labor (DL), or manufacturing overhead (MO).
a. ____ Depreciation of pencil painting machinery
b. ____ Lead inserted into pencils
c. ____ Factory utilities
d. ____ Wages of assembly line worker
e. ____ Salary of supervisor
f. ____ Factory machinery maintenance
g. ____ Wood
h. ____ Eraser compound

Question#3

 Raynor Company has the following data:
Direct labor $76,000
Direct materials used 84,000
Total manufacturing overhead 65,000
Ending work in process 30,000
Beginning work in process 45,000

Instructions
Compute (a) total manufacturing costs and (b) cost of goods manufactured.(Note: No need to prepare a schedule. Just post the dollar amount for the given question)

 

Question#4
Presented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.
____ 1. Property taxes on the factory land
____ 2. Nails and glue used in production
____ 3. Cabinet maker's wages
____ 4. Factory supervisors' salaries
____ 5. Metal used in manufacturing
____ 6. Depreciation on factory machines
____ 7. Factory utilities
____ 8. Carpeting for the recreational vehicles
____ 9. Property taxes on the factory building
____ 10. Insurance on factory equipment

Instructions
Classify the above items into the following categories:
DM — Direct Materials
DL — Direct Labor
MO — Manufacturing Overhead

Question#5

 Match the items in the two columns below by entering the appropriate code letter in the space provided.

A. Managerial accounting              F. Work in process inventory
B. Financial accounting                  G. Direct materials
C. Planning                                            H. Manufacturing overhead
D. Directing                                           I. Period costs
E. Controlling                                       J. Value chain

1. The cost of products that are partially complete.


2. The function of keeping activities in accordance with plans.

 
3. Primarily concerned with internal users and reports pertain to subunits of the entity.


4. Materials that can be physically and directly associated with manufacturing a product.

 
5. The function of setting goals and objectives.

6. Indirect costs of manufacturing a product.


7. Primarily concerned with external users and reports pertain to the entity as a whole.


8. Costs that are noninventoriable.


9. All business processes associated with providing a product or service.


10. The function of coordinating diverse activities to produce a smooth-running operation.

Question#6

 For each item, identify all applicable cost labels. Use the following code in your answer:
1 — Product Cost
2 — Period Cost

a. Advertising _______
b. Direct materials used _______
c. Sales salaries _______
d. Indirect factory labor _______
e. Repairs to office equipment _______
f. Factory manager's salary _______
g. Direct labor _______
h. Indirect materials _______

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