Sperry-New Holland manufactures farm machinery. During 20X1, it incurred a variety of costs, several of which appear
Question:
Sperry-New Holland manufactures farm machinery. During 20X1, 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
Required:
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.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer