CLASSIFYING COST OF PRODUCTION A factory manufactures jelly. The jars of jelly are packed six to a box, and the boxes are sold to grocery stores. The following types of cost were incurred:

Jars Sugar Fruit Pectin (thickener used in jams and jellies)

Boxes Depreciation on the factory building Cooking equipment operators’ wages Filling equipment operators’ wages Packers’ wages Janitors’ wages Receptionist’s wages Telephone Utilities Rental of Santa Claus suit (for the annual Christmas party for factory children)

Supervisory labor salaries Insurance on factory building Depreciation on factory equipment Oil to lubricate filling equipment Required:

Classify each of the costs as direct materials, direct labor, or overhead by using the following table. The row for ‘‘Jars’’ is filled in as an example.

Costs Direct Materials Direct Labor Manufacturing Overhead Jars X Exercise