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Q:2 A The following costs are incurred by an electrical appliance manufacturer. Classify these costs as...

Q:2 A The following costs are incurred by an electrical appliance manufacturer. Classify these costs as direct materials, direct labor, manufacturing overhead, selling, or administrative.

  1. President’s salary.
  2. Cost of electrical wire used in making appliances.
  3. Cost of janitorial supplies (the janitors work in the factory).
  4. Wages of assembly-line workers.
  5. Cost of promotional displays.
  6. Assembly-line supervisor’s salary.
  7. Cost accountant’s salary (the accountant works in the factory).
  8. Cost of cleaner used to clean appliances when they are completed.
  9. Cost of aluminum used for toasters.
  10. Cost of market research survey.
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Answer #1

President’s salary. -------Administrative

Cost of electrical wire used in making appliances. ------ Direct materials

Cost of janitorial supplies (the janitors work in the factory). ------ Manufacturing overhead

Wages of assembly-line workers. - - ---- Direct Labor

Cost of promotional displays. - - - - - Selling

Assembly-line supervisor’s salary. - - - - - Administrative

Cost accountant’s salary (the accountant works in the factory). - - - - Administrative

Cost of cleaner used to clean appliances when they are completed. - - - - - Direct Labor

Cost of aluminum used for toasters. - - - - - Direct materials

Cost of market research survey. - - - - - Selling

Direct materials - Material costs that can be easily traced to products

Direct labor - Labor directly involved in the production of an output.

Administrative - Costs that facilitate the daily operations of the company that are not directly involved in production

Selling - Costs incurred in promoting the product produced in the market

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Answer #2

 

1. President’s salary - Administrative

2. Cost of electrical wire used in making appliances – Direct material

3. Cost of janitorial supplies (the janitors work in the factory) – Manufacturing overhead

4. Wages of assembly-line workers – Direct Labor

5. Cost of promotional displays – Selling

6. Assembly-line supervisor’s salary – Manufacturing overhead

7. Cost accountant’s salary (the accountant works in the factory) – Manufacturing Overhead

8. Cost of cleaner used to clean appliances when they are completed – Manufacturing overhead

9. Cost of aluminum used for toasters – Direct material

10. Cost of market research survey – Selling


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