Exercise 16.13 Classifying Costs (LO16-2, LO16-3, LO16-5)

Classify each of the following costs as a product cost or period cost. If it is a product cost, classify it as direct (or indirect) materials, direct (or indirect) labor, or overhead.

a. Wheat used to make flour at General Mills. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Period cost

Direct material cost

Overhead cost

Product cost

Indirect material cost

Indirect labor cost

Direct labor cost

b. Sales commissions paid to sales personnel at Gap retail stores. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Overhead cost

Product cost

Period cost

Indirect labor cost

Indirect material cost

Direct labor cost

Direct material cost

c. Costs incurred by General Motors for automobile seats purchased from the Lear-Corporation. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Indirect labor cost

Indirect material cost

Period cost

Direct labor cost

Product cost

Direct material cost

Overhead cost

d. Insurance paid on the Target retail stores in Michigan. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Direct labor cost

Overhead cost

Indirect material cost

Product cost

Period cost

Direct material cost

Indirect labor cost

g. Health care costs for the office workers at the headquarters of Johnson & Johnson Company. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Indirect labor cost

Overhead cost

Direct material cost

Indirect material cost

Direct labor cost

Period cost

Product cost

h. Bolts used by Trek Bicycle Corporation to secure the bike parts to the frame. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

Indirect labor cost

Indirect material cost

Direct labor cost

Product cost

Overhead cost

Direct material cost

Period cost