Concept explainers
Classifying costs
The following is a list of costs that were incurred in the production and sale of all-terrain vehicles (ATVs).
a.Attorney fees for drafting a new lease for headquarters offices.
b.Cash paid to outside firm for janitorial services for factory.
c. Commissions paid to sales representatives, based on the number of ATVs sold.
d.Cost of advertising in a national magazine.
e.Cost of boxes used in packaging ATVs.
f. Electricity used to run the robotic machinery.
g.Engine oil used in engines prior to shipment. h. Factory cafeteria cashier's wages.
i. Filler for spray gun used to paint the ATVs.
j. Gasoline engines used for ATVs.
k.Hourly wages of operators of robotic machinery used in production.
I. License fees for use of patent for transmission assembly, based on the number of ATVs produced.
m. Maintenance costs for new robotic factory equipment, based on hours of usage.
n. Paint used to coat the ATVs.
o.Payroll taxes on hourly assembly line employees.
p.Plastic for outside housing of ATVs.
q.Premiums on insurance policy for factory buildings.
r. Properly taxes on the factory building and equipment.
s.Salary of factory supervisor.
t. Salary of quality control supervisor who inspects each ATV before it is shipped.
u.Salary of vice president of marketing.
v. Steering wheels for ATVs.
w. Straight-line
x.Steel used in producing the ATVs.
y.Telephone charges for company controller's office.
z.Tires for ATVs.
Instructions
Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a
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