The Giga Company Produces Tablet Computers Required:
Classify Each of the Company's Costs as a Period

question 126

Essay

The Giga Company produces tablet computers. The following information is provided: $\begin{array}{lr}\text { a) Materials used } & \$ 216,000 \\\text { b) Advertising } & \$ 40,000 \\\text { c) Insurance, factory } & \$ 20,000 \\\text { d) Admunistrative salaries } & \$ 50,000 \\\text { e) Property taxes, factory } & \$ 12,000 \\\text { f) Utilities, admunistrative building } & \$ 22,000\\\text { g) Factory bbor } & \$ 80,000 \\\text { h) Sales commissions } & \$ 56,000 \\\text { i) Factory superviso's salary } & \$ 60,000 \\\text { j) Research and development } & \$ 18,000 \\\text { k) Depreciation. factory } & \$ 12,000 \\\text { l) Depreciation, office } & \$ 8,000 \\\text { m) Indirect materials } & \$ 14,000\end{array}$
Required:
Classify each of the company's costs as a period cost (general, selling, and administrative cost) or as a direct or indirect product cost. Enter the dollar amount of the cost in the appropriate column. After entering all amounts, calculate the total general, selling, and administrative cost, the total direct product cost, and the total indirect product cost. $$\begin{array} { | l | l | l | l | } \hline { \text { Item } } & \text { Period cost } & \text { Direct product cost } & \text { lnderect product cost } \\\hline \text { a) } & & & \\\hline \text { b) } & & & \\\hline \text { c) } & & & \\\hline \text { d) } & & & \\\hline \text { e) } & & & \\\hline \text { f) } & & & \\\hline \text {g) } & & & \\\hline \text { h) } & & & \\\hline \text { i) } & & & \\\hline \text {j) } & & & \\\hline \text { k) } & & & \\\hline \text { l) } & & & \\\hline \text { m) } & & & \\\hline \text { Total } & & & \\\hline\end{array}$$

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Definitions:

Budget Constraint

A limit on the consumption choices of individuals or entities based on their income and the prices of goods and services, representing all possible combinations of goods and services that can be purchased.

Utility Function

A mathematical representation that ranks individuals' preferences over a set of goods and services to represent satisfaction levels.

Consumption Bundle

A combination of different goods and services that a consumer chooses to consume at a given time.

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from purchasing and consuming an additional unit of a good or service.