Question

1. For apparel manufacturer Abercrombie & Fitch, Inc., classify each of the following costs as either a product cost or a period cost:

A. Research and development costs

B. Depreciation on sewing machines

C. Fabric used during production

D. Depreciation on office equipment

E. Advertising expenses

F. Repairs and maintenance costs for sewing machines

G. Salary of production quality control supervisor

H. Utility costs for office building

I. Sales commissions

J. Salaries of distribution center personnel

K. Wages of sewing machine operators

L. Factory janitorial supplies

M. Chief financial officer’s salary

N. Travel costs of media relations employees

O. Factory supervisors’ salaries

P. Oil used to lubricate sewing machines

Q. Property taxes on factory building and equipment

Answer 1

Product costs refer to the costs incurred by a business from manufacturing a product or providing a service and

Period costs are any costs a company incurs that are not directly related to the production process.

Classification of Cost

Particulars	Type of Cost
A. Research and development costs	Period Cost
B. Depreciation on sewing machines	Period Cost
C. Fabric used during production	Product Cost
D. Depreciation on office equipment	Period Cost
E. Advertising expenses	Period Cost
F. Repairs and maintenance costs for sewing machines	Period Cost
G. Salary of production quality control supervisor	Period Cost
H. Utility costs for office building	Period Cost
I. Sales commissions	Period Cost
J. Salaries of distribution center personnel	Period Cost
K. Wages of sewing machine operators	Period Cost
L. Factory janitorial supplies	Period Cost
M. Chief financial officer’s salary	Period Cost
N. Travel costs of media relations employees	Period Cost
O. Factory supervisors’ salaries	Period Cost
P. Oil used to lubricate sewing machines	Product Cost
Q. Property taxes on factory building and equipment	Period Cost