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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Classifying costs as product or period costs
For apparel manufacturer Ann Taylor, Inc., classify each of the following costs as either a product cost or a period cost:
a. Advertising expenses
b.Corporate controller's 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. Salaries of distribution center personnel
m. Salary of production quality control supervisor
n.Sales commissions
o. Utility costs for office building
p. Travel costs of salespersons
q.Wages of sewing machine operators

To determine

Concept Introduction:

Product costs are the costs which are incurred only when a product is produced and on the other hand period costs are the costs which are incurred due to passes of time and it will be incurred in spite a product is produced or not due to periodic in nature.

To Prepare:

To decide whether a particular cost is product cost or period cost.

Explanation
  1. Period cost incurred due to passes of time irrespective of production of a prduct.so in the given scenario Advertising expense, corporate controller salary, depreciation on every plant & machinery, Factory janitorial supplies, factory supervisor salary, property tax on factory building, Repair & maintenance cost for sewing machine, research and development cost, sal...

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