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Classifying Costs The following is a list of costs that were incurred in the production and sale of large commercial airplanes: Classify each cost as
Classifying Costs
The following is a list of costs that were incurred in the production and sale of large commercial airplanes:
Classify each cost as either a product cost or a 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. Cost of electronic guidance system installed in the airplane cockpit | |
b. Special advertising campaign in Aviation World magazine | |
c. Salary of chief compliance officer of company | |
d. Salary of chief financial officer | |
e. Decals for cockpit door, the cost of which is immaterial to the cost of the final product | |
f. Cost of electrical wiring throughout the airplane | |
g. Cost of normal scrap from production of airplane body | |
h. Instrument panel installed in the airplane cockpit | |
i. Depreciation on factory equipment | |
j. Masks for use by painters in painting the airplane body | |
k. Cost of paving the headquarters employee parking lot | |
l. Turbo-charged airplane engine | |
m. Prebuilt leather seats installed in the first-class cabin | |
n. Human Resources Department costs for the year | |
o. Hourly wages of employees that assemble the airplane | |
p. Salary of the Marketing Department personnel | |
q. Oil to lubricate factory equipment | |
r. Yearly cost of the maintenance contract for robotic equipment | |
s. Hydraulic pumps used in the airplanes flight control system | |
t. Cost of miniature replicas of the airplane used to promote and market the airplane | |
u. Metal used for producing the airplane body | |
v. Power used by painting equipment | |
w. Annual bonus paid to the chief operating officer of the company | |
x. Interior trim material used throughout the airplane cabin | |
y. Salary of plant manager | |
z. Annual fee to a celebrity to promote the aircraft |
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