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QUESTION 1 (10 marks) Classify the items below as product or period costs. If you have classified an item as a product cost, indicate whether
QUESTION 1 (10 marks) Classify the items below as product or period costs. If you have classified an item as a product cost, indicate whether it is direct materials, direct labour costs or manufacturing overheads. If you have classified an item as a period cost indicate whether it is a marketing/selling or an administrative cost e.g. 1. factory security guards Product Cost Period Cost Direct Direct Selling Administrative Materials Labor Overhead Expense Expense 1. 1. Raw materials used to manufacture products 2. Wages of workers who handle material during the production process 3. Advertising costs 4. Depreciation on a vehicle used by the managing director 5. The production managers' salary 6. Lease payments on manufacturing equipment 7. Lease payments on vehicles use by sales personnel 8. Depreciation on manufacturing equipment 9. Rent on factory building 10. Cleaning material used by production workers 36
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