Chapter 18, Problem E18.16E

To determine

Product Cost: Product cost is the total quantitative value of all the efforts and resources employed in for production or purchase of goods or services. It includes all types of direct materials and human efforts used by a business.

Period Cost: The cost incurred after the production is called period cost. It is for the benefits of productions but not directly related to production. It includes shipping, selling and other expenses.

Manufacturing Overhead: The total of indirect costs related to factory or production unit incurred during a production cycle is called manufacturing overhead budget. It includes both fixed and variable overheads.

Direct Materials: Material used in manufacturing that is directly related to the finished goods is known as direct material. At the end of the production cycle, direct material is traceable by the final production.

Direct Labor: The amount paid to labor in exchange of their efforts during production cycle of a business is called direct labor cost. It is directly related to production and can be computed on per unit basis.

Prime Cost: The total cost of direct material and direct labor involved in production is called prime cost. It does not include fixed costs.

Conversion Cost: The total cost of required efforts to convert raw material into final products is called conversion costs.

To identify: The correct category for given costs.