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Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins
Edition 5ISBN: 0073526940Classification of Costs The following costs were taken from the accounting records of the Barnwell Manufacturing Company:
1. State income taxes
2. Insurance on the manufacturing facilities
3. Supplies used in manufacturing
4. Wages for employees in the assembly department
5. Wages for employees who deliver the product
6. Interest on notes payable
7. Materials used in the production process
8. Rent for the sales outlet in Sacramento
9. Electricity for manufacturing equipment
10. Depreciation expense on delivery trucks
11. Wages for the sales staff
12. Factory supervisors? salaries
13. Company president?s salary
14. Advertising expense
Required
Classify each item as either a product cost or a period cost. Also, classify all product costs as direct or indirect, assuming that the cost object is each unit of product manufactured.
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Step 1 of 2
Product costs are those costs of a manufacturing firm which are needed in manufacturing the product like direct cost, indirect cost and factory overheads. Period costs are those costs which are not related to manufacturing and are related to managing and delivering the good. Direct costs are those cost which could be directly associated with a cost pool or cost object, while indirect cost cannot be directly associated with any cost pool or cost object.
Step 2 of 2
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