Classify Each Cost of a Furniture Manufacturer as Either a Product

question 42

Essay

Classify each cost of a furniture manufacturer as either a product cost (PR) or a period cost (PE).
$$\begin{array} { | l | l | } \hline{ \text { Cost } } & \text { PR or PE } \\\hline \text { Vice president of marketing's salary } & \\\hline \text { Delivery expense } & \\\hline \text { Wood used to make dining tables } & \\\hline \text { Depreciation on office equipment } & \\\hline \text { Production supervisor's salary } & \\\hline \text { Factory insurance } & \\\hline \text { Corporate office rent } & \\\hline\end{array}$$

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Definitions:

Technological Feasibility

The point at which a company determines that a new technology can be developed and made into a working product.

Software Development Costs

Expenses incurred in the research, development, design, and testing of software, which may be capitalized or expensed depending upon their nature and the accounting policies followed.

Long-lived Assets

Assets expected to provide economic benefits over a period longer than one year, such as buildings, machinery, and equipment.

Capitalizes Expenditures

The process of recording a cost as an asset, rather than an expense, to be written off over the future period.