Problem 14-2A Classifying costs LO C2, C3 The following calendar year-end inform
ID: 2330918 • Letter: P
Question
Problem 14-2A Classifying costs LO C2, C3 The following calendar year-end information is taken from the December 31, 2015, a and other records of Leone Company Advertising expense Depreciation expense Office Depreciation expense Selling equipment Depreciation expense -Factory equipment Factory supervision Factory supplies used Factory utilities Direct labor Indirect labor Miscellaneous production costs Office salaries expense Raw materials purchases Rent expense Office space Rent expense Selling space Rent expense Factory building Maintenance expense -Factory equipment Sales Sales salaries expense $ 28,750 7,250 8,600 33,550 102,600 7,350 33,000 675,480 56,875 8,425 63,000 925,000 22,000 26,100 76,800 35,400 4,462,500 392,560 equipment Assume that the raw materials inventory account is used only for direct material Required: 1,2 & 3. Classify each of the costs as either a product or period cost. Then, classify costs as either direct materials, direct labor, or factory overhead and each o either selling or general and administrative expenses (Leave no cell blank-) Costs Period Cost 1. Advertising expense 2. Depreciation expense Office equipment Depreciation expense Seling equipment iation expense Factory equipmentExplanation / Answer
Product cost is a cost that is incurred for manufacturing a product and thus added to cost of product whereas period cost is a cost that is charged to income statement in the year it is incurred
Product /Period Direct material /Direct labor /Overhead Selling /general and administration 1 Period Selling 2 Period general and administration 3 Period sellling 4 Product Factory overhead 5 Product Factory overhead 6 product Factory overhead 7 product Factory overhead 8 product Direct labor 9 product Factory overhead 10 Product Factory overhead 11 period general and administraion 12 Product Direct material 13 period general and administraion 14 period Selling 15 product Factory overhead 16 Product Factory overhead 17 NA NA NA 18 Period selling