Concept explainers
Cost Classification
Listed below are costs found in various organizations.
1. Property taxes, factory.
2. Boxes used for packaging detergent produced by the company.
3. Salespersons’ commissions.
4. Supervisor’s salary, factory.
5.
6. Wages of workers assembling computers.
7. Insurance, finished goods warehouses.
8. Lubricants for production equipment.
9. Advertising costs.
10. Microchips used in producing calculators.
11. Shipping costs on merchandise sold.
12. Magazine subscriptions, factory lunchroom.
13. Thread in a garment factory.
14. Executive life insurance.
15. Ink used in textbook production.
16.
17. Yarn used in sweater production.
18. Wages of receptionist, executive offices.
Required:
Prepare an answer sheet with column headings as shown below. For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
BREWER ND LL INTRO MGRL ACTG CON+ AC
- For apparel manufacturer Abercrombie Fitch, Inc. (ANF), classify each of the following costs as either a product cost or a period cost: a. Advertising expenses b. Chief financial officers salary c. Depreciation on office equipment d. Depreciation on sewing machines e. Fabric used during production f. Factory janitorial supplies g. Factory supervisors salaries h. Property taxes on factory building and equipment i. Oil used to lubricate sewing machines j. Repairs and maintenance costs for sewing machines k. Research and development costs l. Sales commissions m. Salaries of distribution center personnel n. Salaries of production quality control supervisors o. Travel costs of media relations employees p. Utility costs for office building q. Wages of sewing machine operatorsarrow_forwardThis list contains costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH).t Classify each of these items as direct materials, direct labor, or overhead. Glue used to attach labels to bottles containing a patented medicine. Compressed air used in operating paint sprayers for Student Painters, a company that paints houses and apartments. Insurance on a factory building and equipment. A production department supervisors salary. Rent on factory machinery. Iron ore in a steel mill. Oil, gasoline, and grease for forklift trucks in a manufacturing companys warehouse. Services of painters in building construction. Cutting oils used in machining operations. Cost of paper towels in a factory employees washroom. Payroll taxes and fringe benefits related to direct labor. The plant electricians salaries. Crude oil to an oil refinery. Copy editors salary in a book publishing company. Assume your classifications could be challenged in a court case. Indicate to your attorneys which of your answers for part a might be successfully disputed by the opposing attorneys and why. In which answers are you completely confident?arrow_forwardA manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.arrow_forward
- Classifying costsThe following is a list of costs incurred by several businesses:a. Salary of quality control supervisor b. Packing supplies for products sold. These supplies are a verysmall portion of the total cost of the product.c. Factory operating suppliesd. Depreciation of factory equipmente. Hourly wages of warehouse laborers f. Wages of company controller's secretaryg. Maintenance and repair costs for factory equipmenth. Paper used by commercial printeri. Entertainment expenses for sales representativesj. Protective glasses for factory machine operators k. Sales commissionsl. Cost of hogs for meat processorm. Cost of telephone operators for a toll-free hotline to helpcustomers operate productsn. Hard drives for a microcomputer manufacturer o. Lumber used by furniture manufacturerp. Wages of a machine operator on the production lineq. First-aid supplies for factory workersr. Tires for an automobile manufacturers. Paper used by Computer Department in processing variousmanagerial…arrow_forwardFor each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold, and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product 1. Property taxes, factory 2 Boxes used for packaging detergent produced by the company. 3. Salespersons commissions 4. Supervisor's salary factory 5. Depreciation, encive autos 6. Wages of workers assembling computers 7. Insurance, finished goods warehouses Lubricants for production equipment 9. Advertising costs 10. Microchips used in producing calculators 11. Shipping costs on merchandise soldarrow_forwardClassify the following costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative 1. President's salary. 2. Packages used to hold the skin wipes. 3. Cleaning materials used to clean the skin wipe packages. 4. Wages of workers who package the product. 5. Cost of advertising the product. 6. The salary of the supervisor of the workers who package the product. 7. Cost accountant's salary (the accountant works in the factory). 8. Cost of a market research survey. 9. Sales commissions paid as a percent of sales. 10. Depreciation of administrative office building. Problem B Classify the costs listed in the previous problem as either product costs or period costs.arrow_forward
- 1 For each of the following costs, identify the cost behavior as variable, mixed, or fixed: 1. Wages of assembly line workers 2. President's salary. 3. Plant utilities, 4. Sales force commissions 5. Shipping costs 6. Factory rent. 7. Research and development expenses 8. Property taxes 9. Advertising. 10. Supplies used in productionarrow_forwardA 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 Cost Classification 1. Factory electricity 2. Advertising 3. Depreciation on factory machine 4. Batteries for electric cars 5. Office supplies used 6. Wages to assembly workers 7. Salesperson commissions 8. Steel for cars 9. Depreciation on office equipment 10. Leather for car seatsarrow_forwardClassifying Costs The following is a list of costs incurred by several businesses. Classify each of the following costs as product costs or period costs. 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. Costs Classification a. Salary of quality control supervisor b. Packing supplies for products sold. These supplies are a very small portion of the total cost of the product. c. Factory operating supplies d. Depreciation of factory equipment e. Hourly wages of warehouse laborers f. Wages of company controller’s secretary g. Maintenance and repair costs for factory equipment h. Paper used by commercial printer i. Entertainment expenses for sales representatives j. Protective glasses for factory machine operators k. Sales commissions l. Cost of hogs for meat processor m. Cost of…arrow_forward
- Classify each of the following costs as manufacturing or non manufacturing: 1. Factory rental 2. Interest on bank overdraft 3. Depreciation on warehouse equipment 4. Salary and bonus for the chief accountant 5. Wages of security guards in factory 6. Advertising 7. Property taxes on corporate headquarters building 8. Gas and electricity for the factory 9. Carriage on purchase of raw materials 10. Operators of product help lines for customersarrow_forwardListed here are product costs for production of soccer balls. Classify each cost as either direct or indirect. Product Cost 1. Coolants for machinery 2. Wages of product assembly workers 3. Annual flat fee paid for factory security 4. Taxes on factory 5. Machinery depreciation (straight-line) 6. Rubber bladder interior for balls 7. Factory building rent 8. Wages of factory machine operators 9. Wages of factory maintenance workers 10. Factory supervisor salary Direct or Indirectarrow_forwardFor apparel manufacturer Abercrobmie & Fitch, Inc., classify each of the following costs as either a product cost or a period cost: Research and development costs Depreciation on sewing machines Fabric used during production Depreciation on office equipment Advertising expenses Repairs and maintenance costs for sewing machines Salary of production quality control supervisor Utility costs for office building Sales commissions Salaries of distribution center personnel Wages of sewing machine operators Factory janitorial supplies Chief financial officer’s salary Travel costs of media relations employees Factory supervisors’ salaries Oil used to lubricate sewing machines Property taxes on factory building and equipmentarrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegePrinciples of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub