E15 – 8The following are costs associated with manufacturing firms, merchandising firms, or service firms

E15 – 8 Cost Classifications

E15 – 8The following are costs associated with manufacturing firms, merchandising firms, or service firms:

a. Miscellaneous materials used in production

b. Salesperson’s commission in a real estate firm

c. Administrators’ salaries for a furniture wholesaler

d. Administrators’ salaries for a furniture manufacturer

e. Freight costs associated with acquiring inventories for a grocery store

f. Office manager’s salary in a doctor’s office

g. Utilities for the corporate offices of a toy manufacturer

h. Line supervisor’s salary for a clothing manufacturing firm

i. Training seminar for sales staff of a service firm

j. Fuel used in a trucking firm

k. Paper used at a printing business

l. Oil for machinery at a plastics manufacturing firm

m. Food used at a restaurant

n. Windshields used for a car manufacturer

Classify the costs as (1) product or period; (2) variable or fixed; and (3) for those that are product costs, as direct materials, direct labor, or manufacturing overhead. Write “not applicable (N/A)” if a category doesn’t apply.

SOLUTION PREVIEW

1.				Product Cost			Period
	Name of the Cost	Variable Cost	Fixed Cost	Direct Materials	Direct Labor	Mfg. Overhead	(selling and admin) Cost
a.	Miscellaneous materials used in production	X				X

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