Assume that Suzie Whitson has decided to begin production of her outdoor children’s toy. Her company is Jiffy Jet and costs for last month follow.

Factory rent ................ $ 3,200

Company advertising ............. 1,000

Wages paid to assembly workers ........ 30,000

Depreciation for salespersons’ vehicles ....... 2,000

Screws ................... 500

Utilities for factory ............... 900

Assembly supervisor’s salary .......... 3,500

Sandpaper .................. 150

President’s salary .............. 6,000

Plastic tubing ................. 4,200

Paint ..................... 250

Sales commissions .............. 1,200

Factory insurance ............... 1,000

Depreciation on cutting machines ....... 2,000

Wages paid to painters ............ 7,500

Required:

1. Identify each of the preceding costs as either a product or a period cost. If the cost is a product cost, decide whether it is for direct materials (DM), direct labor (DL), or manufacturing overhead (MOH).

2. Determine the total cost for each of the following:

a. Direct materials.

b. Direct labor.

c. Manufacturing overhead.

d. Prime cost.

e. Conversion cost.

f. Total product cost.

3. Suppose all period costs were incorrectly identified as product costs. What impact could that have on Jiffy Jet’s financial statements? Be specific.