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Classifying costs The following is a list of costs that were incurred in the production and sale of large commercial airplanes: a. Cost of electronic guidance system installed in the airplane cockpit b. Special advertising campaign in Aviation World magazine c. Salary of chief compliance officer of company d. Salary of chief financial officer e. Decals for cockpit door, the cast of which is immaterial to the cost of the final product f. Cost of electrical wiring throughout the airplane g. Cost of normal scrap from production of airplane body h. Instrument panel installed in the airplane cockpit i. Depreciation on factory equipment j. Masks for use by painters in painting the airplane body k. Cost of paving the headquarters employee parking lot l. Turbo-charged airplane engine m. Prebuilt leather seats installed in the first-class cabin n. Human Resources Department costs for the year o. Hourly wages of employees that assemble the airplane p. Salary of the Marketing Department personnel q. Oil to lubricate factory equipment r. Yearly cost of the maintenance contract for robotic equipment s. Hydraulic pumps used in the airplane’s flight control system t. Cost of miniature replicas of the airplane used to promote and market the airplane u. Metal used for producing the airplane body v. Power used by painting equipment w. Annual bonus paid to the chief operating officer of the company x. Interior trim material used throughout the airplane cabin y. Salary of plant manager 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:

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 18, Problem 18.1APR
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:

Chapter 18, Problem 18.1APR, Classifying costs The following is a list of costs that were incurred in the production and sale of

Expert Solution
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 of Solution

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...

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Chapter 18 Solutions

Accounting
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Ch. 18 - Management process Three phases of the management...Ch. 18 - Management process Three phases of the management...Ch. 18 - Direct materials, direct labor, and factory...Ch. 18 - Direct materials, direct labor, and factory...Ch. 18 - Prime and conversion costs Identify the following...Ch. 18 - Prime and conversion costs Identify the following...Ch. 18 - Product and period costs Identify the following...Ch. 18 - Product and period costs Identify the following...Ch. 18 - Cost of goods sold, cost of goods manufactured...Ch. 18 - Cost of goods sold, cost of goods manufactured...Ch. 18 - Classifying costs as materials, labor, or factory...Ch. 18 - Classifying costs as materials, labor, or factory...Ch. 18 - Classifying costs as factory overhead Which of the...Ch. 18 - Classifying costs as product or period costs For...Ch. 18 - Concepts and terminology From the choices...Ch. 18 - Concepts and terminology From the choices...Ch. 18 - Classifying costs in a service company A partial...Ch. 18 - Sustainability and eco-efficiency measures Four...Ch. 18 - Classifying costs The following report was...Ch. 18 - Financial statements of a manufacturing firm The...Ch. 18 - Manufacturing company balance sheet Partial...Ch. 18 - Cost of direct materials used in production for a...Ch. 18 - Cost of goods manufactured for a manufacturing...Ch. 18 - Cost of goods manufactured for a manufacturing...Ch. 18 - Income statement for a manufacturing company Two...Ch. 18 - Statement of cost of goods manufactured for a...Ch. 18 - Cost of goods sold, profit margin, and net income...Ch. 18 - Cost flow relationships The following information...Ch. 18 - Uses of managerial accounting in a service company...Ch. 18 - Classifying costs The following is a list of costs...Ch. 18 - Classifying costs The following is a list of costs...Ch. 18 - Cost classifications for a service company A...Ch. 18 - Manufacturing income statement, statement of cost...Ch. 18 - Statement of cost of goods manufactured and income...Ch. 18 - Classifying costs The following is a list of costs...Ch. 18 - Classifying costs The following is a list of costs...Ch. 18 - Cost classifications for a service company A...Ch. 18 - Manufacturing income statement, statement of cost...Ch. 18 - Statement of cost of goods manufactured and income...Ch. 18 - Ethics in Action Avett Manufacturing Company...Ch. 18 - Communication Todd Johnson is the vice president...Ch. 18 - Managerial accounting in the management process...Ch. 18 - Classifying costs Geek Gut Company provides...Ch. 18 - Using managerial accounting Information The...

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