1. Identify each expense as a product or period cost 2. Identify each expense as a fixed or variable You can summarize in a chart as follows: (an example is provided) Expense Period Rent Expense for office Administrative Salaries Advertising exp Depreciation - factory bldg Depreciation - Factory equip Depreciation - Office Equip Direct Labour Cost Insurance on Factory R&M on factory Sales Salaries Taxes on Factory Travel & Entertainment Exp Product Variable Fixed x