Question

Question 4

Classify each cost as a period or a product cost.

1.		Advertising costs		Product CostPeriod Cost
2.		Glue and nails used in production		Period CostProduct Cost
3.		Depreciation on factory equipment		Product CostPeriod Cost
4.		Sales commission paid to salesperson		Period CostProduct Cost
5.		Salary of controller		Product CostPeriod Cost
6.		Wages paid to assembly-line workers		Product CostPeriod Cost
7.		Flour used in baking cakes		Period CostProduct Cost
8.		Utilities of the factory building		Period CostProduct Cost
9.		Property taxes paid on the main office building		Period CostProduct Cost
10.		Office supplies purchased		Period CostProduct Cost

Answer 1

Solution

		Classification
1	Advertising costs	Period cost
2	Glue and nails used in production	Product cost
3	Depreciation on factory equipment	Product cost
4	Sales commission paid to salesperson	Period cost
5	Salary of controller	Period cost
6	Wages paid to assembly-line workers	Product cost
7	Flour used in baking cakes	Product cost
8	Utilities of the factory building	Product cost
9	Property taxes paid on the main office building	Period cost
10	Office supplies purchased	Period cost

All factory costs are product costs even the rent of factory, salary of factory manager.

All expense out of factory such as related to sales, distribution, administration, marketing are period cost.