1. Classify the costs in the items below using the following format below. Identify the right answer and put an X Items Direct Materials (Product Cost)

Direct Labor (Product Cost)

Manufacturing Overhead (Product Cost)

Period Cost (Selling cost) Period Cost (Administrative cost) Opportunity Cost Sunk Cost Differential Cost CD Company is a shirt manufacturing company producing and selling different types of shirts to customers around the world. Some of their cost items are listed below: 1. Materials used in producing the shirts. 2. The threads used in sewing the shirts. 3. The labor costs for each type of shirt in the manufacturing division. 4. The factory supervisors salary for the manufacturing division. 5. Rent on office building. 6. The cost of equipment purchased five years ago which is no longer usable. 7. The cost of manufacturing buttons compared with the cost of buying them from external supplier. 8. The rent foregone due to the decision to use the factory space rather than renting it. 9. The sales commission paid to the sales people. 10. Depreciation on equipment used to manufacture the shirts. 11. Heat, water and power used in the factory. 12. The salary of the accountant 13. The lease cost of the building which is used for administrative and manufacturing purpose. 14. The boxes which are used to package the shirts. 15. The cost of shipping the boxes of shirts to the customers.

2. The following data have been taken from the accounting records of YZ Company for the month ending 30th September 2020 Sales $ 800,000 Cost of goods sold $ 200,000 Sales commission ($1000 per month plus 5% of sales) Administrative expenses (2/3 variable and 1/3 fixed) $30000 Depreciation of office equipments $200 per month Executive salaries: 50% fluctuates with sales and the rest is fixed. $ 12000 Insurance expense $300 per month Clerical costs $1000 per month plus $20 per unit sold Delivery expense $20 per unit sold Utilities expense (30% variable and 70% fixed) $5500 Miscellaneous expenses $ 500 per month plus 1% of sales Selling price per unit $500

Instructions: 1. Using the information provided above prepare an income statement for the month of September using the Traditional Format where costs are organized by function.

2. Prepare an income statement for the month of September using the Contribution Format where costs are organized by behavior.