Question

Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense.

Costs	Classification
a. Attorney fees for drafting a new lease for headquarters offices.
b. Cash paid to outside firm for janitorial services for factory.
c. Commissions paid to sales representatives, based on the number of ATVs sold.
d. Cost of advertising in a national magazine.
e. Cost of boxes used in packaging ATVs.
f. Electricity used to run the robotic machinery.
g. Engine oil used in engines prior to shipment.
h. Factory cafeteria cashier's wages.
i. Filter for spray gun used to paint the ATVs.
j. Gasoline engines used for ATVs.
k. Hourly wages of operators of robotic machinery used in production.
l. License fees for use of patent for transmission assembly, based on the number of ATVs produced.
m. Maintenance costs for new robotic factory equipment, based on hours of usage.
n. Paint used to coat the ATVs.
o. Payroll taxes on hourly assembly line employees.
p. Plastic for outside housing of ATVs.
q. Premiums on insurance policy for factory buildings.
r. Property taxes on the factory building and equipment.
s. Salary of factory supervisor.
t. Salary of quality control supervisor who inspects each ATV before it is shipped.
u. Salary of vice president of marketing.
v. Steering wheels for ATVs.
w. Straight-line depreciation on the robotic machinery used to manufacture the ATVs.
x. Steel used in producing the ATVs.
y. Telephone charges for company controller's office.
z. Tires for ATVs.

Answer 1

Answer -

Classifying Costs

	Costs	Classification
a.	Attorney fees for drafting a new lease for headquarters offices.	Administrative expense, period cost.
b.	Cash paid to outside firm for janitorial services for factory.	Factory overhead cost, product cost.
c.	Commissions paid to sales representatives, based on the number of ATVs sold.	Selling expense, period cost.
d.	Cost of advertising in a national magazine.	Selling expense, period cost.
e.	Cost of boxes used in packaging ATVs.	Direct materials cost, product cost.
f.	Electricity used to run the robotic machinery.	Factory overhead cost, product cost.
g.	Engine oil used in engines prior to shipment.	Direct materials cost, product cost.
h.	Factory cafeteria cashier's wages.	Factory overhead cost, product cost.
i.	Filter for spray gun used to paint the ATVs.	Factory overhead cost, product cost.
j.	Gasoline engines used for ATVs.	Direct materials cost, product cost.
k.	Hourly wages of operators of robotic machinery used in production.	Direct labor cost, product cost.
l.	License fees for use of patent for transmission assembly, based on the number of ATVs produced.	Factory overhead cost, product cost.
m.	Maintenance costs for new robotic factory equipment, based on hours of usage.	Factory overhead cost, product cost.
n.	Paint used to coat the ATVs.	Direct materials cost, product cost.
o.	Payroll taxes on hourly assembly line employees.	Direct labor cost, product cost.
p.	Plastic for outside housing of ATVs.	Direct materials cost, product cost.
q.	Premiums on insurance policy for factory buildings.	Overhead cost, product cost
r.	Property taxes on the factory building and equipment.	Overhead cost, product cost.
s.	Salary of factory supervisor.	overhead cost, product cost.
t.	Salary of quality control supervisor who inspects each ATV before it is shipped.	Factory overhead cost, product cost.
u.	Salary of vice president of marketing.	Selling expense, period cost.
v.	Steering wheels for ATVs.	Direct materials cost, product cost.
w.	Straight-line depreciation on the robotic machinery used to manufacture the ATVs.	Overhead cost, product cost.
x.	Steel used in producing the ATVs.	Direct materials cost, product cost.
y.	Telephone charges for company controller's office.	Administrative expense, period cost.
z.	Tires for ATVs.	Direct materials cost, product cost.