Indicate whether each of the following costs of a cabinet manufacturer would be
ID: 2435510 • Letter: I
Question
Indicate whether each of the following costs of a cabinet manufacturer would be classified as direct materials cost, direct labor cost, factory overhead cost, or period cost.
Plant manager’s salary _______________________________
Office administrative assistant’s salary _____________________________
Depreciation on factory equipment ________________________________
Rent on office building _______________________________
Varieties of wood ______________________________
Varnish for costing cabinets _______________________________
Utilities cost on the factory _______________________________
Cabinet assembly worker’s salary ________________________________
Advertising costs ________________________________
Screws and glue used in assembly process ____________________________
Explanation / Answer
SOLUTION:
Solution:
1
Plant manager’s salary
Factory overhead
2
Office administrative assistant’s salary
Period
3
Depreciation on factory equipment
Factory overhead
4
Rent on office building
Period
5
Varieties of wood
Direct material
6
Varnish for costing cabinets
Factory overhead
7
Utilities cost on the factory
Factory overhead
8
Cabinet assembly worker’s salary
Direct labor
9
Advertising costs
Period
10
Screws and glue used in assembly process
Factory overhead
?
Direct material cost refers to those cost of the raw materials and components utilized to create a product.
Direct labor are those employees and temporary help that work directly on a manufacturer's goods.
Factory overhead are costs incurred during the process of manufacturing, not including the costs of direct labor and direct materials.
A period cost are those cost that cannot be capitalized into prepaid expenses, fixed assets, or inventory.
1
Plant manager’s salary
Factory overhead
2
Office administrative assistant’s salary
Period
3
Depreciation on factory equipment
Factory overhead
4
Rent on office building
Period
5
Varieties of wood
Direct material
6
Varnish for costing cabinets
Factory overhead
7
Utilities cost on the factory
Factory overhead
8
Cabinet assembly worker’s salary
Direct labor
9
Advertising costs
Period
10
Screws and glue used in assembly process
Factory overhead