100% View Zoom Add Category Pivot Table #1 Income Statement Insert Table Chart Chart Text Shape Media Camment #1 Cost Classification #2 CVP analysis 2 Collaborate #3 Fixed & Flexible Budgets Format Organize #4 Capital Budgeting + #1 Manufacturing Statement #1 T-accounts INSTRUCTIONS: Place a large X in the appropriate bomes for classification. If you feel your cost could be a mixed cost, insert an X* in both the Fixed and Variable columns, Submit Part 1 to the Dropbox before proceeding on to the next section Product costs are those production costs necessary to create a product and consist of direct materials, direct lobor, and factory overhead. Overhead refers to production costs other than direct materials and direct labor. Period costs are non-production costs usually associated with activities linked to a time period. Common examples of period costs include salaries of the sales staff wages of maintenance workers, advertising expenses, and depreciation on office furniture and equipment. Period costs and are expensed in the period when incurred either as selling expenses or as general and administrative expenses. COST BEHAVIOR PRODUCT COSTS PRIME CONVERSION Direct Materials Direct Labor Direct Labor Overhead PERIOD COSTS Selling G&A Expenses Expenses Selected Trial Balance accounts Variable Advertising Expense Fixed X X Depreciation expense - Office Equipment Depreciation expense - Selling Equipment Depreciation expanse - Factory Fquipment Factory Supervision X Factory Supplies used Factory Utilities Ito Direct Materials Indirect Materials Direct Labor Pirector Indirect labor name Income Taxes Expense Miscellaneous production costs cou Office Salaries Expense Rent Expense Office Space Rent Expense - Selling Soace Rent Expense - Factory Building Maintence Expense - Factory Sales Salaries Expense * In theory, sales salaries can be a mixed cost if there is an added commission based on sales plus salary, assuming fixed for this course * Utilities contain bath a fixed and variable cost . An argument can be made for income tax expense as fixed or variable, as well as the factory maintenance expense