Question

Insert Page Layout Formulas Home Data Review View ACROBAT Add-ins Team Tell me Calibri 11 AA== . Wrap Text General Copy BIU. 3. S.A $ Merge & Center - % Format Painter 88 Condit * Format Font Alignment Number - X Manufacturing overhead (MOH) board Requirementi a. Identify the following as either a product cost or a period cost. b. Select the appropriate product cost category, or select expense. Description Cost Classification Coconut flakes used in the cookies. Product Depreciation on the ovens. Product Insurance on the computers used in the accounting office. Period Wages for the bakery security guard. Product Salaries of the bakers who make the cookies. Product Electricity for the bakery. Product Heating for the corporate headquarters. Period Freight for shipping the cookies to customers. Period Salary of the baking supervisor. Product Category Direct materials (DM) Manufacturing overhead (MOH) Expense Manufacturing overhead (MOH) Direct labor (DL) Manufacturing overhead (MOH) Expense Expense Manufacturing overhead (MOH) INTERANSWERS ENTERANSWERS INTERANSWERS

Answer 1

Answer:

Product cost refers to the costs incurred to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Product cost can also be considered the cost of the labor required to deliver a service to a customer.
Period costs are expenses that will be reported on the income statement without ever attaching to products. Since they are not product costs, period costs will not be included in the cost of inventory. Instead, period costs will be referred to as period expenses since they will be reported on the income statement as selling, general and administrative or interest expenses.Examples of period costs are general and administrative expenses, such as rent, office depreciation, office supplies, and utilities.

Now, come to the given question, here the costs which are incurred on,

1. Coconut flakes used in cookies is clearly a product cost as it directly involved in the product process. Thus the category is it is a material directly used in the production so it is a direct material cost (DM).

2. Depreciation generally a period cost. But in this question the depreciation that is being provided on the ovens which are used in the production is a product cost as those assets are involved in the production process. This depreciation is categorized as manufacturing overhead (MOH).

3. Insurance on the computers used in the accounting office is clearly a period cost as it does not related lo product activity. It comes under the category of expense.

4. Wages for the bakery security guard is a product cost as this is one of the indirect labor which which is indirectly related to production activity. It is also categorized as manufacturing overhead (MOH).

5. Salaries of the bakers who make cookies is a product cost because it is directly involved in production activity. These salaries were categorized as direct labor (DL).

6. Electricity for the bakery is a product cost since it is also a part of factory (bakery) expense. Thus the electricity is categorized as a manufacturing overhead (MOH).

7. Heating for the corporate headquarters is a period cost ​as it is a administrative expense that directly related to the office. Thus the heating is categorized as expense.

8. Freight for shipping cookies to customers is a period cost as this cost occurs after the product is finished and can actively marketable. Therefore this freight is treated as a expense.

9. Salary of the baking supervisor is a product cost as this supervisor is working for the factory to make the product. This is categorized as manufacturing overhead since it is an indirect labor expenditure.