Cost concept

Which of the following is a product cost?

• Glass in an automobile

• Advertising

• The salary of the vice president-finance

• Rent on a factory.

Which of the following would not be classified as a product cost?

• Direct materials.

• Direct labor

• Sales commissions

• Indirect materials

Costs that are expensed when incurred are called:

• direct costs

• period costs

• product costs

• indirect costs

Which of the following is not a period cost?

• Legal costs

• Public relations costs

• Wages of assembly-line workers

• Sales commissions

Which of the following employees would not be classified as indirect labor?

• Plant Custodian

• Salesperson and assembler of wooden furniture

• Plant security guard.

Lake Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $500,000; assembly-line workers, $180,000; security guards, $45,000; and plant supervisor, $110,000. The total of Lake's direct labor cost was

• $110,000.

• $180,000

• $155,000

• $235,000

Mideast Motors manufactures automobiles. Which of the following would not be classified as direct materials by the company?

• Tires

• Interior leather

• Wheel lubricant

• CD player.

Consider the following items:

A. Tomatoes used in the manufacture of Hunts ketchup

B. Administrative salaries of executives employed by Jet Blue Airlines

C. Wages of assembly-line workers at a Ford plant

D. Marketing expenditures of the Atlanta Braves baseball club

E. Commissions paid to Coca-Cola's salespeople

F. Straight-line depreciation on manufacturing equipment owned by Dell Computer

G. Shipping charges incurred by Office Depot on out-going orders

H. Speakers used in Sony home-theater systems

I. Insurance costs related to a Mary Kay Cosmetics' manufacturing plant

Required:

Classify each of the costs listed as (1) a product or period cost