Indicate Whether Each of the Following Costs Is a Product

question 250

Short Answer

Indicate whether each of the following costs is a product cost or a period cost. Assume a manufacturer.
A)________ direct materials used in factory
B)________ factory utilities
C)________ salespersons' commissions
D)________ salary of plant manager
E)________ indirect materials used in factory
F)________ depreciation expense on store equipment
G)________ indirect labor incurred in factory
H)________ advertising expense
I)________ direct labor incurred in factory
J)________ factory machinery repairs and maintenance
K)________ depreciation expense on factory machinery
L)________ supplies used in store
M)________ plant insurance expired

• A)________ direct materials used in factory
• B)________ factory utilities
• C)________ salespersons' commissions
• D)________ salary of plant manager
• E)________ indirect materials used in factory
• F)________ depreciation expense on store equipment
• G)________ indirect labor incurred in factory
• H)________ advertising expense
• I)________ direct labor incurred in factory
• J)________ factory machinery repairs and maintenance
• K)________ depreciation expense on factory machinery
• L)________ supplies used in store
• M)________ plant insurance expired

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Definitions:

Direct Labor Cost

The expense incurred by a company for wages, benefits, and other costs for employees who work directly on the manufacturing of products.

Produced

Refers to the quantity of goods or services created by a company during a specific time period.

Predetermined Overhead Rate

A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a specified activity base.

Variable Overhead

Costs that fluctuate with the level of production or service delivery, such as utilities or raw materials.