g.
Glass used in automobiles
h.
Factory maintenance supplies
i.
Depreciation on assembly plant
j.
Plant manager's salary
k.
CEO's salary
l.
Depreciation on executive building
m.
Salary of marketing executive
n.
Tires installed on automobiles
o.
Advertising
Required:
Complete the answer sheet above by placing an "X" under each heading that identifies the cost involved.
Answer:
Direct Materials
Direct Labor
Manufacturing Overhead
Period Cost
a.
Steel used in automobiles
X
b.
Assembly department employee wages
X
c.
Utility costs used in executive building
X
d.
Travel costs of sales personnel
X
e.
Cost of shipping goods to customers
X
f.
Property taxes on assembly plant
X
g.
Glass used in automobiles
X
h.
Factory maintenance supplies
X
i.
Depreciation on assembly plant
X
j.
Plant manager's salary
X
k.
CEO's salary
X
l.
Depreciation on executive building
X
m.
Salary of marketing executive
X
n.
Tires installed on automobiles
X
o.
Advertising
X
Difficulty: 2 Medium
Topic: Cost Classifications for Preparing Financial Statements
Learning Objective: 01-03 Understand cost classifications used to prepare financial statements: product costs and period costs.
Bloom's: Apply
AACSB: Reflective Thinking
AICPA: BB Critical Thinking; FN Measurement
287) Asplund Corporation has provided the following information:
Cost per Unit
Cost per Period
Direct materials
$6.25
Direct labor
$2.90
Variable manufacturing overhead
$1.30
Fixed manufacturing overhead
$18,000
Sales commissions
$1.50
Variable administrative expense
$0.45
Fixed selling and administrative expense
$7,500
Required:
a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,000 units?
b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,000 units?
Answer:
a.
Direct materials
$6.25
Direct labor
2.90
Variable manufacturing overhead
1.30
Variable manufacturing cost per unit
$10.45
Total variable manufacturing cost
($10.45 per unit × 5,000 units produced)
$52,250
Total fixed manufacturing overhead cost
18,000
Total product (manufacturing) cost
$70,250
b.
Sales commissions
$1.50
Variable administrative expense
0.45
Variable selling and administrative expense per unit
$1.95
Total variable selling and administrative expense
($1.95 per unit × 5,000 units sold)
$9,750
Total fixed selling and administrative expense
7,500