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. Product costs are those production costs necessary to create a product and consist of direct materials, direct labor, and factory overhead.

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 ont 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 a 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 PERIOD COSTS Selling G&A Expenses Expenses Variable Fixed PRODUCT COSTS PRIME CONVERSION Selected Trial Balance accounts Direct Materials Direct Labor Direct Labor Overhead Advertising Expense Depreciation expense - Office Equipment Depreciation expense - Selling Equipment Depreciation expense - Factory Equipment Factory Supervision Factory Supplies used Factory Utilities Direct Materials Indirect Materials Direct Labor Indirect Labar Income Taxes Expense Miscellaneous production costs Office Salaries Expense Rent Expense - Office Space Rent Expense - Selling Space Rent Expense - Factory Building Maintence Expense - Factory Sales Salaries Expense * 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. * Utilities contain both a fixed and variable cost * An argument can be made for income tax expense as fixed or variable, as well as the factory maintenance expense