Question

Indicate whether the following costs of Procter & Gamble, a maker of consumer products, would be classified as direct materials cost, direct labor cost, or factory overhead cost: Cost Classification a. Resins for body wash products b. Scents and fragrances used in making soaps and detergents c. Plant manager salary for the Iowa City, lowa, plant d. Depreciation on the Auburn, Maine, manufacturing plant e. Depreciation on assembly line in the Mehoopany, Pennsylvania, paper products plant f. Maintenance supplies g. Packaging materials, which are a significant portion of the total product cost h. Wages of production line employees at the Pineville, Louisiana, soap and detergent plant I. Wages paid to Packaging Department employees in the Bear River City, Utah, paper products plant .Salary of process engineers

Answer 1

Answer-1:

Direct material cost: The direct material cost is one of the variable costs involved in the production process. It is the cost of the raw materials and components used to create a product. These can be easily identifiable with the resulting product .

Direct labour cost: Direct labour cost is the cost which can be easily identified with a particular product or process of converting raw materials to finished goods.

Factory overhead cost:- It is the indirect expense incurred during the manufacturing process, not including the costs of direct labor and direct materials.

Based on above, answer to the question are as belows:-

Sl. No. a. b. c. d. e. Type of cost Direct material cost Direct material cost Factory overhead cost Factory overhead cost Factory overhead cost Factory overhead cost Direct material cost Direct labour cost Direct labour cost Factory overhead cost h.

Answer-2:

The correct manufacturing cost of Marching Ants is determined as belows:-

551,300 478,100 Particulars Cost of direct material used in production ($607,500 - $56,200) Direct labour ($562,500 - $84,400) Factory overhead: Indirect material Indirect labour Supervisors salaries Heat, lights and power Insurance and property taxes-plant Depreciation-plant and equipment Total factory overhead Total Manufacturing Costs 56,200 84,400 17,500 140,650 151,900 123,750 574,400 1,603,800

Note: Period cost such as selling expenses and administartive expenses does not form part of the manufacturing cost..

Hence, selling expense such as sales salaries and promotional expense and administrative expenses such as insurance and property taxes-corporate office and depreciation-corporate office, have not been included in above calculation of manufacturing cost.