Classify Each of the Following Costs for Harrison Company as a Selling

question 32

Essay

Classify each of the following costs for Harrison Company as a selling or general and administrative period cost or as a direct or indirect product cost by entering the dollar amount(s) in the appropriate column(s):
A. Paid $75,000 in wages for employees who assemble the company's products.B. Paid sales commissions of $58,000.C. Paid $38,000 in salaries for factory supervisors.D. Paid $88,000 in salaries for executives (president and vice presidents).E. Recorded depreciation cost of $25,000. $13,000 was depreciation on factory equipment and $12,000 was depreciation on the company headquarters building.F. Paid $4,000 for various supplies that it used in the factory (oil and materials used in machine maintenance).G. Used $10,000 in prepaid corporate liability insurance

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Definitions:

Cost of Goods Sold

The primary costs involved in the production of goods a company deals in, including the expenses for materials and labor.

Variances

Differences between planned, budgeted, or standard costs and actual costs, used in performance measurement and control.

Standard Cost

A predetermined cost of manufacturing, delivering, or producing goods under normal conditions.

Standard Cost System

An accounting system that estimates the cost of products in advance, using standard rates for materials and labor.