Question
The following is a list of costs that were incurred in the production and sale of large commercial airplanes: Annual bonus paid to the chief
The following is a list of costs that were incurred in the production and sale of large commercial airplanes:
Annual bonus paid to the chief financial officer of the company
Annual fee to a celebrity to promote the aircraft
Cost of electronic guidance system installed in the airplane cockpit
Cost of the flight data recorder (the black box) for the airplane
Cost of normal scrap from production of the airplane body
Cost of small replicas of the airplane used to promote and market the airplane
Cost of paving the headquarters employee parking lot
Decals for cockpit door, the cost of which is immaterial to the cost of the final product
Depreciation on factory equipment
Hourly wages for janitorial staff for the factory
Hydraulic pumps used in the airplanes flight control system
Instrument panel installed in the airplane cockpit
Interior trim material used throughout the airplane cabin
Masks for use by painters in painting the airplane body
Metal used for producing the airplane body
Oil to lubricate factory equipment
Power used by painting equipment
Prebuilt leather seats installed in the first-class cabin
Production Quality Control Department costs for the year
Salaries of Marketing Department personnel
Salaries of test pilots
Salary of chief financial officer
Salary of plant manager
Special advertising campaign in Aviation World magazine
Wages of employees that assemble the airplanes
Yearly cost of the maintenance contract for robotic equipment
INSTRUCTIONS
Classify each cost as either a product cost or a 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 your answer, placing an X in the appropriate column:
Product CostsPeriod Costs CostDirect Materials CostDirect Labor CostFactory Overhead CostSelling ExpenseAdministrative Expense
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