E2-28 Consider the
following costs that were incurred during the current year:
1. Tire costs incurred
by Ford Motor Company.
2. Sales commissions
paid to the sales force of Dell Inc.
3. Wood glue consumed in
the manufacture of Thomasville furniture.
4. Hourly wages of
refinery security guards employed by ExxonMobil Corporation.
5. The salary of a
financial vice president of Hewlett Packard.
6. Advertising costs of
Coca-Cola.
7. Straight-line
depreciation on factory machinery of Boeing Corporation.
8. Wages of
assembly-line personnel of Whirlpool Corporation.
9. Delivery costs on
customer shipments of Ben & Jerry’s ice cream.
10. Newsprint consumed in
printing The New York Times.
11. Plant insurance costs
of Texas Instruments.
12. Glass costs incurred
in light-bulb manufacturing of General Electric.
Required:
Evaluate each of the preceding
and determine whether the cost is
( a ) a product cost or a
period cost,
( b ) variable or fixed in
terms of behavior, and
( c ) for the product
costs only, whether the cost is properly classified as direct material, direct
labor, or manufacturing overhead. Item 1 is done as an example:
Tire costs: Product cost,
variable, direct material
TUTORIAL PREVIEW
|
Item
|
Productcost/ Period cost
|
Variable cost/ Fixed cost
|
Product cost only
|
|
Tire costs incurred by Ford Motor Company.
|
Product
|
Variable
|
Direct material
|
|
Sales commissions paid to the sales force of Dell
Inc.
|
Period
|
Variable
|
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