125% R View Zoom Add Category Pivot Table #1 Income Statement Insert Table Chart Chart Text Text Shape Media Comment #1 Cost Classification #2 CVP analysis 2 Collaborate #3 Fixed & Flexible Budgets Format Organize #4 Capital Budgeting + #1 Manufacturing Statement #1 T-accounts B E G E I J INSTRUCTIONS: Place a large X in the appropriate boxes 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 labor, 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 o 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 Fixed X X X X 8 Advertising Expense Depreciation expense - Office Equipment Depreciation expense - Selling Equipment Depreciation expense - Factory Equipment 10 Factory Supervision 11 Factory Supplies used 12 Factory Utilities 13 Direct Materials X X 14 Indirect Materials 15 Direct Labor 18 Indirect Labor 17 Income Taxes Expense 16 Miscellaneous production costs 19 Office Salaries Expense 20 Rent Expense - Office Space 21 Rent Expense - Selling Space 22 Rent Expense - Factory Building 23 Maintence Expense - Factory 24 Sales Salaries Expense 25 * 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