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. $$\begin{array} { | l | l | l | l | } \hline { \text { Item } } & \text { Period cost } & \text { Direct product cost } & \text { lnderect product cost } \\\hline \text { a) } & & & \\\hline \text { b) } & & & \\\hline \text { c) } & & & \\\hline \text { d) } & & & \\\hline \text { e) } & & & \\\hline \text { f) } & & & \\\hline \text {g) } & & & \\\hline \text { h) } & & & \\\hline \text { i) } & & & \\\hline \text {j) } & & & \\\hline \text { k) } & & & \\\hline \text { l) } & & & \\\hline \text { m) } & & & \\\hline \text { Total } & & & \\\hline\end{array}$$

---

Definitions:

Average Cost

The total cost of production divided by the quantity of output, representing the cost per unit of output.

Interest Rate

The cost of borrowing money or the return on investment, expressed as a percentage of the principal.

Market Price

The current price at which a good or service can be bought or sold, determined by supply and demand.

Diminishing Returns

A rule in economics that asserts once investments in a specific sector reach beyond a certain threshold, the returns on those investments will not keep rising if all other factors stay unchanged.