Concept explainers
The following is a list of costs incurred by several manufacturing companies:
a. Annual picnic for plant employees and their families
b. Cost of fabric used by clothing manufacturer
c. Cost of plastic for a toy manufacturer
d. Cost of sewing machine needles used by a shirt manufacturer
e. Cost of television commercials
f. Depreciation of copying machines used by the Marketing Department
g. Depreciation of microcomputers used in the factory to coordinate and monitor the production schedules
h. Depreciation of office building
i. Depreciation of robotic equipment used to assemble a product
j. Electricity used to operate factory machinery
k. Factory janitorial supplies
I. Fees charged by collection agency on past-due customer accounts
m. Fees paid to lawn service for office grounds
n. Maintenance
o. Oil lubricants for factory plant and equipment
p. Pens, paper, and other supplies used by the Accounting Department
q. Repair costs for factory equipment
r. Rent for a warehouse used to store work in process and finished products
s. Salary of a physical therapist who treats plant employees
t. Salary of the manager of a manufacturing plant
u. Telephone charges by corporate office
v. Travel costs of marketing executives to annual sales meeting
w. Wages of a machine operator on the production line
x. Wages of production quality control personnel
Instructions
Classify each of the preceding costs as a product cost or period cost. 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. Use the following tabular headings for preparing your answer, placing an “X” in the appropriate column:
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Managerial Accounting
- The following is a list of costs incurred by several manufacturing companies: a. Bonus for vice president of marketing b. Costs of operating a research laboratory c. Cost of unprocessed milk for a dairy d. Depreciation of factory equipment e. Entertainment expenses for sales representatives f. Factory supplies g. First-aid nurse for factory workersh. Health insurance premiums paid for factory workers i. Hourly wages of warehouse laborers j. Lumber used by furniture manufacturer k. Maintenance costs for factory equipment l. Microprocessors for a microcomputer manufacturer m. Packing supplies for products sold, which are insignificant to the total cost of the product n. Paper used by commercial printer o. Paper used in processing various managerial reports p. Protective glasses for factory machine operators q. Salaries of quality control personnel r. Sales commissions s. Seed for grain farmer t. Television advertisement u. Prebuilt transmissions for an automobile manufacturer v. Wages of a machine operator on the production line w. Wages of secretary of company controller x. Wages of telephone operators for a toll-free, customer hotline Instructions Classify each of the preceding costs as a product cost or period cost. 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. Use the following tabular headings for preparing your answer. Place an X in the appropriate column.arrow_forwardClassify 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_forwardWhich of the following would most likely be a period cost? Depreciation on factory lunchroom furniture. Salary of telephone receptionist in the sales office. Salary of a security guard for the factory parking lot. Computer chips used by a computer manufacturer.arrow_forward
- Which of the following costs is best classified as a fixed cost with respect to volume of activity? (See your Chapter 20 notes, page 5) Direct labor Electricity used to heat, light, and cool a factory Cleaning supplies used in an automobile assembly plant Straight-line depreciation expense of a machine used in a factory Total cost of salaries paid to quality inspectors in a manufacturing plant Tires used in an automobile manufacturing plantarrow_forwardThe following is a list of costs incurred by several manufacturing companies: a. Bonus for vice president of marketing b. Costs of operating a research laboratory c. Cost of unprocessed milk for a dairy d. Depreciation of factory equipment e. Entertainment expenses for sale representatives f. Factory supplies g. First-aid nurse for factory workersh. Health insurance premiums paid for factory workers i. Hourly wages of warehouse laboresrs j. Lumber used by furniture manufacturer k. Maintenance costs for factory equipment l. Microprocessors for a microcomputer manufacturer m. Packing supplies for products sold, which are insignificant to the total cost of the product n. Paper used by commercial printer o. Paper used in processing various managerial reports p. Protective glasses for factory machine operators q. Salaries of quality control personnel r. Sales commissions s. Seed for gain farmer t. Television advertisment u. Prebuilt transmissions for an automobile manufacturer v. Wages of a…arrow_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_forward
- Browning Furniture Company manufactures furniture at its Akron, Ohio, factory. Some of its costs from the past year include: Depreciation on sales office Depreciation on factory equipment Factory supervisor salary Sales commissions Lubricants used in factory equipment Insurance costs for factory Wages paid to maintenance workers Fabric used to upholster furniture Freight-in (on raw materials) Costs of delivery to customers Wages paid to assembly-line workers Lumber used to build product $9300 16,800 50,100 23,400 3900 21,500 115,300 10,900 3000 9700 115,600 82,100 54,500 26,700 Utilities in factory Utilities in sales office Prime costs for Browning Furniture Company totaled $93,000. $377,000. $208,600. $211,600.arrow_forwardIndicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost: Cost Classification a. Depreciation of robotic assembly line equipment b. V8 automobile engine c. Steering wheel d. Wheels e. Painting safety masks for employees working in the paint room f. Salary of test driver g. Glass used in the vehicle’s windshield h. Wages of assembly line workerarrow_forwardPresented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.____ 1. Property taxes on the factory land____ 2. Nails and glue used in production____ 3. Cabinet maker's wages____ 4. Factory supervisors' salaries____ 5. Metal used in manufacturing____ 6. Depreciation on factory machines____ 7. Factory utilities____ 8. Carpeting for the recreational vehicles____ 9. Property taxes on the factory building____ 10. Insurance on factory equipmentInstructionsClassify the above items into the following categories:DM — Direct MaterialsDL — Direct LaborMO — Manufacturing Overheadarrow_forward
- The following is a list of costs incurred by several manufacturing companies: Classify each of the following costs as product cost or period cost. 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. Annual picnic for plant employees and their families b. Cost of fabric used by clothing manufacturer c. Cost of plastic for a toy manufacturer d. Cost of sewing machine needles used by a shirt manufacturer e. Cost of television commercials f. Depreciation of copying machines used by the Marketing Department g. Depreciation of microcomputers used in the factory to coordinate and monitor the production schedules h. Depreciation of office building i. Depreciation of robotic equipment used to assemble a product j. Electricity used to operate factory machinery k. Factory…arrow_forwardVarious costs associated with the operation of factories are given below:1. Electricity to run production equipment.2. Rent on a factory building.3. Cloth used to make drapes.4. Production superintendent’s salary.5. Wages of laborers assembling a product.6. Depreciation of air purification equipment used to make furniture.7. Janitorial salaries.8. Peaches used in canning fruit.9. Lubricants for production equipment.10. Sugar used in soft-drink production.11. Property taxes on the factory.12. Wages of workers painting a product.13. Depreciation on cafeteria equipment.14. Insurance on a building used in producing helicopters.15. Cost of rotor blades used in producing helicopters.Required:Classify each cost as either variable or fixed with respect to the number of units produced and sold. Alsoindicate whether each cost would typically be treated as a direct cost or an indirect cost with respect tounits of product.arrow_forwardWithin the accounting system of a group of companies, the following types of expenses are incurred. Complete the following table by placing each expense in the correct cost classification. Reference Number Types of expenses 1 Costs of opening a new facility 2 Costs of conducting business in a new location or with a new class of customer (including costs of staff training) 3 Costs of site preparation 4 Costs of testing whether the asset is functioning properly 5 Electrical installation costs 6 Costs of dismantling and removing the item and restoring the site on which it is located 7 Administration costs 8 Import duty of an imported machine 9 Purchase of a five-year maintenance contract with plant 10 Legal fees for sales and purchase agreement for acquisition of land 11 Interest on loan on a self constructed property after the asset is ready for use 12 Architect fees incurred for self constructed building 13 General overheads incurred for self…arrow_forward
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