Question

Exercise 14-6 Cost classification LO C3 Georgia Pacific, a manufacturer, incurs the following costs. (1) Classify each cost as either a product or a period cost. If a product cost, identify it as direct materials, direct labor, or factory overhead, and then as a prime and/or conversion cost. (2) Classify each product cost as either a direct cost or an indirect cost using the product as the cost object. Cost by Traceability Period or Product Direct material, Direct labor, or Factory Overhead Prime or Conversion 1. Factory utilities 2. Advertising 3. Amortization of patents on factory machine 4. State and federal income taxes 5. Office supplies used 6. Insurance on factory building | 7. Wages to assembly workers

Answer 1

There are two types of cost in Department Period cost and product cost...

Period cost are cost which is used in selling, marketing, administrative and general cost

Product cost are cost which is used in manufacturing either direct manufacturing cost or indirect manufacturing cost

	Cost by traceability	Period cost, product cost	Direct material, direct labor, manufacturing overhead	Prime or conversion
1.	Factory utilities	Product cost	Manufacturing overhead	Conversion
2	Advertising	Period cost
3	Amortization of patent on factory machine	Product cost	Manufacturing overhead	Conversion
4	State and federal income tax	Period cost
5	Office supplies used	Period cost
6	Insurance on factory building	Product cost	Manufacturing overhead	Conversion
7	Wages for assembly workers	Product cost	Direct labor	Prime and conversion cost