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:

Impairment

The decrease in the market value of an asset below its book value, leading to a write-down of the asset's value on financial statements.

Future Cash Flows

Projected cash earnings and outflows that a company expects to receive or pay out in the future.

Book Value

Book value is the net value of a company's assets minus its liabilities, often used to assess whether a company's stock is over or undervalued by the market.

Fixed Asset Turnover Ratio

This ratio measures how effectively a company uses its fixed assets to generate sales, calculated as net sales divided by average fixed assets.