Question

Consider the following costs that were incurred during the current year:
1. Advertising costs of Nike.
2. Straight- line depreciation on factory machinery of Airbus Industrie.
3. Wages of assembly- line personnel of Amana.
4. Delivery costs on customer shipments of Ben & Jerry’s ice cream.
5. Newsprint consumed in printing the Philadelphia Inquirer.
6. Plant insurance costs of Levi Strauss.
7. Glass costs incurred in light- bulb manufacturing of General Electric.
8. Tire costs incurred by Subaru.
9. Sales commissions paid to the sales force of Apple
10. Wood glue consumed in the manufacture of Thomasville furniture.
11. Hourly wages of refinery security guards employed by Exxon Corporation.
12. The salary of a financial vice president of Microsoft.

Required:
Evaluate each of the preceding and determine whether the cost is
(a) A product cost or a period cost,
(b) Variable or fixed in terms of behavior, and
(c) For the product costs only, whether the cost is properly classified as direct material, direct labor or manufacturing overhead. Item 8 is done as an example:



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  • CreatedApril 22, 2014
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