BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Classifying costs

The following is a list of costs that were incurred in the production and sale of large commercial airplanes:

  1. a. Cost of electronic guidance system installed in the airplane cockpit
  2. b. Special advertising campaign in Aviation World magazine
  3. c. Salary of chief compliance officer of company
  4. d. Salary of chief financial officer
  5. e. Decals for cockpit door, the cast of which is immaterial to the cost of the final product
  6. f. Cost of electrical wiring throughout the airplane
  7. g. Cost of normal scrap from production of airplane body
  8. h. Instrument panel installed in the airplane cockpit
  9. i. Depreciation on factory equipment
  10. j. Masks for use by painters in painting the airplane body
  11. k. Cost of paving the headquarters employee parking lot
  12. l. Turbo-charged airplane engine
  13. m. Prebuilt leather seats installed in the first-class cabin
  14. n. Human Resources Department costs for the year
  15. o. Hourly wages of employees that assemble the airplane
  16. p. Salary of the Marketing Department personnel
  17. q. Oil to lubricate factory equipment
  18. r. Yearly cost of the maintenance contract for robotic equipment
  19. s. Hydraulic pumps used in the airplane’s flight control system
  20. t. Cost of miniature replicas of the airplane used to promote and market the airplane
  21. u. Metal used for producing the airplane body
  22. v. Power used by painting equipment
  23. w. Annual bonus paid to the chief operating officer of the company
  24. x. Interior trim material used throughout the airplane cabin
  25. y. Salary of plant manager
  26. 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 Ls 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:

images

To determine

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.

To classify: Each of the costs as either a product cost or a period cost, and to indicate whether it is a direct material cost, direct labor cost, or a factory overhead cost if it is product cost, and whether it is a selling expense, or administrative expense if it is period cost.

Explanation

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 whether it is a selling expense, or administrative expense.

Cost Product Costs Period Costs
Direct Materials Cost Direct Labor Cost Factory Overhead Cost Selling Expense Administrative 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. X
s. X
t...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Describe the steps Involved in the MBO process.

Foundations of Business (MindTap Course List)

Explain how absolute advantage and comparative advantage differ.

Principles of Economics (MindTap Course List)

PRO FORMA INCOME STATEMENT At the end of last year, Roberts Inc. reported the following income statement (in mi...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)