E DICUL ACCOUNTING EXERCISE 2-1 Classifying Manufacturing Costs [LOL] The PC Works assembles custom computers from components supplied by Val mputers from components supplied by various manufacturers. a ll The company is very small and its assembly shop and retail sales store are housed in a sm ity in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required: For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, selling, or an administrative cost. 1. The cost of a hard drive installed in a computer. 2. The cost of advertising in the Puget Sound Computer User newspaper. 3. The wages of employees who assemble computers from components. 4. Sales commissions paid to the company's salespeople. 5. The wages of the assembly shop's supervisor. 6. The wages of the company's accountant. 7. Depreciation on equipment used to test assembled computers before release to customers. 8. Rent on the facility in the industrial park. EXERCISE 2-2 Cost Terminology for Manufacturers [LOI, LO2] Arden Company reported the following costs and expenses for the most recent month: Direct materials ...... Direct labor.. Manufacturing overhead ... Selling expenses ...... Administrative expenses $80,000 $42,000 $19,000 $22.000 $35,000 Required: 1. What is the total amount of product costs? 2. What is the total amount of period costs? 3. What is the total amount of conversion costs? 4. What is the total amount of prime costs