Classify each cost as either a product cost or a period cost. Indicate whether e
ID: 2452399 • Letter: C
Question
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.
a. Memberships for key executives in the Bass World Association.
b. Cost of electrical wiring for boats.
c. Wood paneling for use in interior boat trim.
d. Annual bonus paid to top executives of the company.
e. Legal department costs for the year.
f. Salary of shop supervisor.
g. Salary of president of company.
h. Fiberglass for producing the boat hull.
i. Cost of normal scrap from defective hulls.
j. Oil to lubricate factory equipment.
k. Special advertising campaign in Bass World.
l. Masks for use by sanders in smoothing boat hulls.
m. Hourly wages of assembly line workers.
n. Decals for boat hull, the cost of which is immaterial to the cost of the final product.
o. Salary of chief financial officer.
p. Power used by sanding equipment.
q. Straight-line depreciation on factory equipment.
r. Cost of boat for "grand prize" promotion in local bass tournament.
s. Canvas top for boats.
t. Commissions to sales representatives, based upon the number of boats sold.
u. Yearly cost of the maintenance contract for robotic equipment.
v. Steering wheels.
w. Cost of metal hardware for boats, such as ornaments and tie-down grasps.
x. Boat chairs.
y. Annual fee to pro-fisherman Bill Tennessee to promote the boats.
z. Cost of paving the headquarters employee parking lot.
Explanation / Answer
a. Memberships for key executives in the Bass World Association. = Period Cost (Administrative)
b. Cost of electrical wiring for boats. = Product cost ( Direct Material)
c. Wood paneling for use in interior boat trim. = Product cost ( Direct Material)
d. Annual bonus paid to top executives of the company. = Period Cost (Administrative)
e. Legal department costs for the year. = Period Cost (Administrative)
f. Salary of shop supervisor. = Period Cost (Administrative)
g. Salary of president of company. = Period Cost (Administrative)
h. Fiberglass for producing the boat hull. = Product cost ( Direct Material)
i. Cost of normal scrap from defective hulls. = Product cost ( Direct Material)
j. Oil to lubricate factory equipment. = Product cost ( Factory Overhead cost)
k. Special advertising campaign in Bass World. = Period cost (Selling)
l. Masks for use by sanders in smoothing boat hulls. = Product cost ( Factory Overhead cost)
m. Hourly wages of assembly line workers. = Product cost ( Direct Labour cost)
n. Decals for boat hull, the cost of which is immaterial to the cost of the final product.=Product cost ( Direct Material)
o. Salary of chief financial officer. = Period Cost (Administrative)
p. Power used by sanding equipment. = Product cost ( Factory Overhead cost)
q. Straight-line depreciation on factory equipment. = Product cost ( Factory Overhead cost)
r. Cost of boat for "grand prize" promotion in local bass tournament. = Period cost (Selling)
s. Canvas top for boats. = Product cost (Direct Material)
t. Commissions to sales representatives, based upon the number of boats sold. = Period cost (Selling)
u. Yearly cost of the maintenance contract for robotic equipment. = Product cost ( Factory Overhead cost)
v. Steering wheels. = Product cost ( Direct Material)
w. Cost of metal hardware for boats, such as ornaments and tie-down grasps. = Product cost ( Direct Material)
x. Boat chairs. = Product cost ( Direct Material)
y. Annual fee to pro-fisherman Bill Tennessee to promote the boats. = Period Cost (Selling)
z. Cost of paving the headquarters employee parking lot. =Period Cost (Administrative)