PROBLEM #1 For all parts of this problem assume that the cost object is the product (a water bottle). Part A: Raw Materials for Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance, materials that become a physical part of the finished product and are a major Direct materials are the category of product costs. Indirect materials include materials used in the plant that are not easily traced to individual products and/or any physical components of the product that are very and not worth the effort to directly trace. Indirect materials are part of the cost category called Both types of raw materials (direct and indirect) are classified as cost of the water bottle in inventory. costs and are included as part of the Required: After viewing the video, list at least five examples of materials used in the manufacture of water bottles. Classify each type of material as direct or indirect by checking the appropriate box. An example has been provided. Type of material: Example: soap for washing bottles Indirect Direct X 1. 2. 3. 4. 5. Part B: Labor Used to Manufacture Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. Direct labor is the cost of employee compensation for those who materials into finished products. Direct labor is directly major category of product cost. raw to the product. Direct labor is the second Indirect labor includes the cost of everyone who works in the plant who does finished goods. directly work to produce Required: The videos feature multiple employees whose wages would be considered direct labor. List four specific labor activities (tasks) that you observed in the videos that would be classified as direct labor. Be sure your description of the activity specifically describes the work. An example has been provided: Direct Labor Tasks Example: Placing metal pin to hinge lid 1. 2. 3. 4. Required: Examples of indirect labor were not always apparent in the video. Using what you learned from your reading of Chapter 2, list three examples of indirect labor that are likehly to be incurred in the water bottle plant. Indirect Labor Tasks Example: Quality control staff 1. 2. 3. Part C: Manufacturing Overhead (MOH) for Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. costs Manufacturing overhead is the third broad category for In addition to including indirect material and indirect labor, MOH includes all other the plant. costs incurred in Manufacturing overhead costs cannot be directly traced to products so they are instead. to the product Required: Although they may not have been explicitly shown in the video, list two plant-related costs (that are not indirect material or indirect labor) that would fit into the MOH category. Manufacturing Overhead Costs Example: Cost of insurance on the factory 1. 2. FHO) for mod d Windewn inde Gemeatos ntlCoreit MelFuleP Part D: Period Costs Remember that period costs are the other costs of the firm that are not related to the actual manufacturing of the produc Period costs are not considered part of the cost of the water bottles. Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. expenses or selling, general and administrative expenses. Period costs are also called Rather than flowing through the asset accounts as inventory and ultimately ending up as cost of goods sold, in the period period costs are Required: Speculate as to what might be period costs for Wonderful Water Bottles and list at least three. An example has been provided. Example: Design cost for a new model of water bottle. 1. 2. 3. PROBLEM #1 For all parts of this problem assume that the cost object is the product (a water bottle). Part A: Raw Materials for Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance, materials that become a physical part of the finished product and are a major Direct materials are the category of product costs. Indirect materials include materials used in the plant that are not easily traced to individual products and/or any physical components of the product that are very and not worth the effort to directly trace. Indirect materials are part of the cost category called Both types of raw materials (direct and indirect) are classified as cost of the water bottle in inventory. costs and are included as part of the Required: After viewing the video, list at least five examples of materials used in the manufacture of water bottles. Classify each type of material as direct or indirect by checking the appropriate box. An example has been provided. Type of material: Example: soap for washing bottles Indirect Direct X 1. 2. 3. 4. 5. Part B: Labor Used to Manufacture Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. Direct labor is the cost of employee compensation for those who materials into finished products. Direct labor is directly major category of product cost. raw to the product. Direct labor is the second Indirect labor includes the cost of everyone who works in the plant who does finished goods. directly work to produce Required: The videos feature multiple employees whose wages would be considered direct labor. List four specific labor activities (tasks) that you observed in the videos that would be classified as direct labor. Be sure your description of the activity specifically describes the work. An example has been provided: Direct Labor Tasks Example: Placing metal pin to hinge lid 1. 2. 3. 4. Required: Examples of indirect labor were not always apparent in the video. Using what you learned from your reading of Chapter 2, list three examples of indirect labor that are likehly to be incurred in the water bottle plant. Indirect Labor Tasks Example: Quality control staff 1. 2. 3. Part C: Manufacturing Overhead (MOH) for Water Bottles Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. costs Manufacturing overhead is the third broad category for In addition to including indirect material and indirect labor, MOH includes all other the plant. costs incurred in Manufacturing overhead costs cannot be directly traced to products so they are instead. to the product Required: Although they may not have been explicitly shown in the video, list two plant-related costs (that are not indirect material or indirect labor) that would fit into the MOH category. Manufacturing Overhead Costs Example: Cost of insurance on the factory 1. 2. FHO) for mod d Windewn inde Gemeatos ntlCoreit MelFuleP Part D: Period Costs Remember that period costs are the other costs of the firm that are not related to the actual manufacturing of the produc Period costs are not considered part of the cost of the water bottles. Required: Complete the following statements by filling in the blanks. Refer to Chapter 2 for guidance. expenses or selling, general and administrative expenses. Period costs are also called Rather than flowing through the asset accounts as inventory and ultimately ending up as cost of goods sold, in the period period costs are Required: Speculate as to what might be period costs for Wonderful Water Bottles and list at least three. An example has been provided. Example: Design cost for a new model of water bottle. 1. 2. 3