Krasnoy Tire, a maker of tires for cars, trucks, and tractors, is trying to determine how to account for various factory costs. The costs include the following:

a. Wages earned by a factory supervisor.

b. Fringe benefits of the factory supervisor.

c. The rent expense of company headquarters, which is located 10 miles from the factory.

d. Rubber used in the production of tires.

e. The property taxes of the factory.

f. Wages earned by an employee working on the production of tires.

g. Inexpensive glue used sparingly in the production of tires.

h. A cleaning solvent used to clean production machinery.

i. Wages earned by an employee who inspects finished tires before they leave the factory.

j. Wages earned by a marketing manager at company headquarters.

Instructions:

1. For each of the costs above, determine whether the cost should be classified as direct materials, direct labor, factory overhead, or none. Hint: Only costs related to the factory or to production should be included as manufacturing costs.

2. Specify the subsidiary ledger (materials ledger, cost ledger, finished goods ledger) in which the cost is first recorded.