MANAGERIAL ACCT: Classifying Costs

PR 18-2A Classifying costs The following is a list of costs incurred by several businesses: a. Rent for a warehouse used to store work in process and finished products. b. Depreciation of copying machines used by the Marketing Department. c. Maintenance costs for factory equipment d. Fees charged by collectin agency on past-due customer accounts. OBJ. 2 Le. Surgeon's fee for heart bypass surgery. f. Cost of 30-second television commercial. 8. Telephone charges by president's office. h. Travel costs of marketing executives to annual sales meeting. i. Cost of plastic for a telephone being manufactured j Pens, paper, and other supplies used by the Accounting Department in preparing reports. k. Charitable contribution to United Fund. I. Depreciation of tools used in production. m. Cost of fabric used by clothing manufacturer. n. Depreciation of robot used to assemble a product o. Wages of a machine operator on the production line. p.Salary orthe vice president of manufacturing operations. q. Factory janitorial supplies. r. Maintenance and repair costs for factory equipment s. Electricity used to operate factory machinery. t. Oil lubricants for factory plant and equipment. u. Cost of sewing a rt manufacturer v. Fees paid to lawn service for office grounds upkeep. w. Depreciation of microcomputers used in the factory to coordinate and monitor the production schedules x. Wages of production quality control personnel. Instructions Classify each of the preceding costs as a product cost or 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. Use the following tabular headings for preparing your answer, placing an "X" in the ap- propriate column. Product Costs Period Costs Direct Materials Cost Labor Cost OverheadSelling pense Administrative Expense Cost Materials Direct Cost