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The following is a list of costs that were incurred in the production and sale of lawn mowers: a. Attorney fees for drafting a new lease for headquarter offices b. Cash paid to outside firm for janitorial services for factory c. Commissions paid to sales representatives, based on the number of lawn mowers sold d. Cost of advertising in a national magazine e. Cost of boxes used in packaging lawn mowers f. Electricity used to run the robotic machinery g. Engine oil used in mower engines prior to shipment h. Factory cafeteria employees’ wages i. Filter for spray gun used to paint the lawn mowers j. Gasoline engines used for lawn mowers k. Hourly wages of operators of robotic machinery used in production l. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced m. Maintenance costs for new robotic factory equipment, based on hours of usage n. Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product o. Payroll taxes on hourly assembly line employees p. Plastic for outside housing of lawn mowers q. Premiums on insurance policy for factory buildings r. Property taxes on the factory building and equipment s. Salary of factory supervisor t. Salary of quality control supervisor who inspects each lawn mower before it is shipped u. Salary of vice president of marketing v. Steel used in producing the lawn mowers w. Steering wheels for lawn mowers x. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers y. Telephone charges for company controller’s office z. Tires for lawn mowers 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 factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for your answer, placing an “X” in the appropriate column:

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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Section
BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 1, Problem 1PB
Textbook Problem
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The following is a list of costs that were incurred in the production and sale of lawn mowers:

  1. a. Attorney fees for drafting a new lease for headquarter offices
  2. b. Cash paid to outside firm for janitorial services for factory
  3. c. Commissions paid to sales representatives, based on the number of lawn mowers sold
  4. d. Cost of advertising in a national magazine
  5. e. Cost of boxes used in packaging lawn mowers
  6. f. Electricity used to run the robotic machinery
  7. g. Engine oil used in mower engines prior to shipment
  8. h. Factory cafeteria employees’ wages
  9. i. Filter for spray gun used to paint the lawn mowers
  10. j. Gasoline engines used for lawn mowers
  11. k. Hourly wages of operators of robotic machinery used in production
  12. l. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced
  13. m. Maintenance costs for new robotic factory equipment, based on hours of usage
  14. n. Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product
  15. o. Payroll taxes on hourly assembly line employees
  16. p. Plastic for outside housing of lawn mowers
  17. q. Premiums on insurance policy for factory buildings
  18. r. Property taxes on the factory building and equipment
  19. s. Salary of factory supervisor
  20. t. Salary of quality control supervisor who inspects each lawn mower before it is shipped
  21. u. Salary of vice president of marketing
  22. v. Steel used in producing the lawn mowers
  23. w. Steering wheels for lawn mowers
  24. x. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers
  25. y. Telephone charges for company controller’s office
  26. z. Tires for lawn mowers

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 factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for your answer, placing an “X” in the appropriate column:

Chapter 1, Problem 1PB, The following is a list of costs that were incurred in the production and sale of lawn mowers: a.

To determine

Classify each of the costs as either a product cost or a period cost, and indicate whether it is a direct material cost, direct labor cost, or a factory overhead cost if it is product cost, and describe whether it is a selling expense or administrative expense if it is period cost.

Explanation of Solution

Product costs:

Product costs are the costs which are incurred in the production of the goods. These costs include the direct materials cost, direct labor cost, and factory overhead cost.

Period costs:

Period costs are the costs other than the product costs. These costs are not incurred in manufacturing the goods. These costs include the administrative expenses, and selling expenses.

Classify each of the costs as either a product cost or a period cost, and indicate whether it is a direct material cost, direct labor cost, or a factory overhead cost or describe whether it is a selling expense, or administrative expense.

CostProduct CostsPeriod Costs
Direct Materials CostDirect Labor CostFactory Overhead CostSelling ExpenseAdministrative Expense
a.    X
b.  X  
c.   X 
d.   X 
e.X    
f.  X  
g.  X  
h.  X  
i.  X  
j.X    
k. X   
l.  X  
m.  X  
n.  X  
o. X   
p.X    
q.  X  
r...

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Chapter 1 Solutions

Managerial Accounting
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