Answer:
Product costs
Product costs consist of all manufacturing costs. Manufacturing costs includes direct material costs, direct labor costs and factory overheads. Hence, product costs are also called manufacturing costs.
Direct material
Direct material cost is the cost of raw materials. Cost of raw materials forms an integral part of the finished product.
Direct labor
Salaries and wage expenses amounts to direct labor cost.
Factory overheads
All indirect costs associated with manufacturing process of a product come under factory overheads. Factory overheads are otherwise called factory burden or manufacturing overheads.
Period costs
Selling and administrative costs come under period costs. Hence, period costs are also called non-manufacturing costs.
Selling expenses include sales commissions and sales expenses. Administrative expenses include factory rent, electricity, maintenance, salaries, and interest expenses.
Classify the costs as follows:
to the sales representatives, based on the number of lawn mowers sold
X
15
Payroll taxes on hourly assembly line employees
X
16
Gasoline engines used for lawn mowers
X
17
Hourly wages of operators of robotic machinery used in production
X
18
Straight line depreciation on the robotic machinery used to manufacture the lawn mowers
X
19
Factory cafeteria cashiers wages
X
20
Maintenance costs for new robotic factory equipment, based on hours of wages
X
21
Telephone charges for company's controller's office
X
22
Electricity used to run the robotic machinery
X
23
Steering wheels for lawn mowers
X
24
Salary of vice president of marketing
X
25
Engine oil used in mower engines prior to shipment
X
26
Filter for spray gun used to paint the lawn mowers
X
Answer:
Direct material
The cost of raw materials which form an integral part of the finished product and also a significant portion of the total product cost is called direct material costs.
Direct labor
The cost of salaries and wages which form an integral part of the finished product and also a significant portion of the total product cost is called direct labor costs.
Factory overheads
Factory overheads are all indirect costs associated in the manufacture of a product or service providence.
Factory overheads do not form an integral part of the finished product and also do not form a significant portion of the total product cost. Factory overheads are otherwise called factory burden or manufacturing overhead
2A) Costs related to automobile manufacturer
a)
Wages of employees that operate painting equipment are an example of factory overhead because their wages for cost of painting the automobile does not form an integral part of the automobile and does not form a significant portion of the total product cost.
b)
Wages of plant supervisor are an example of factory overhead because the salary for supervision of the automobile plant does not form an integral part of the automobile and does not form a significant portion of the total product cost.
Wages of plant supervisor is an indirect cost because they are not directly engaged in the production of an automobile.
c)
Steel is an example of direct material because automobiles are made up of steel and aluminum hence it forms an integral part of the automobile and also forms a significant portion of the total product cost.
d)
Oil used for assembly line machinery is an of factory overhead because the cost of the oil used in assembling line machinery of the automobile does not form an integral part of the automobile and does not form a significant portion of the total product cost.
2B) Costs related to magazine publisher
a)
Staples used to bind magazines' is a factory overhead because the cost of the staples used in binding magazines' for magazine publisher does not form an integral part of the magazine and does not form a significant portion of the total product cost
b)
Wages of employees that operate printing equipment are an example of direct labor because their wages for cost of printing the magazine forms an integral part of the automobile and forms a significant portion of the total product cost.
c)
Maintenance of the printing machines is a factory overhead because the cost of maintenance of the printing machinery for the magazine publisher does not form an integral part of the magazine and does not form a significant portion of the total product cost.
d)
Paper is an example of direct material because magazines' are made up of paper hence it forms an integral part of the magazine and also forms a significant portion of the total product cost.
Answer:
2)
The above table is constructed assuming each service call as a job.