Question: Sperry New Holland manufactures farm machinery During 2014 it incurred a

Sperry-New Holland manufactures farm machinery. During 2014, it incurred a variety of costs, several of which appear on the following list.
Nature of Incurred Cost
a. Comprehensive liability insurance premium on corporate headquarters
b. Depreciation on production equipment
c. Electricity consumed
d. Property and casualty insurance premiums
e. Raw material used
f. Royalties paid to the designer of one of the company’s products
g. Salaries of corporate legal counsel
h. Travel expenses for sales force
i. Wages of plant maintenance personnel
j. Wages of production workers
k. Workers compensation insurance

Classify each listed cost as a product or period cost, or both. For costs that are probably allocable to both classifications, suggest a reasonable allocation approach.

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  • CreatedSeptember 10, 2014
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