Cost Classifications
Consider the following costs that were incurred during the current year:
1. Tire costs incurred by Ford Motor Company.
2. Sales commissions paid to the sales force of Dell Inc.
3. Wood glue consumed in the manufacture of Thomasville furniture.
4. Hourly wages of refinery security guards employed by F.xxon Mobil Corporation.
5. The salary of a financial vice president of Hewlett Packard.
6. Advertising costs of Coca-Cola
7. Straight-line depreciation on factory machinery of Boeing Corporation.
8. Wages of assembly-line personnel of Whirlpool Corporation.
9. Delivery costs on customer shipments of Ben&Jerry's ice cream.
10. Newsprint consumed in printing The New York Times.
11. Plant insurance costs of Texas Instruments.
12. Glass costs incurred in light-bulb manufacturing of General Electric.
Required: Evaluate each of the preceding and determine whether the cost is (a) a product cost or a period cost, (b) variable or fixed in terms of behavior, and (c) for the product costs only, whether the cost is properly classified as direct material, direct labor, or manufacturing overhead. Item 1 is done as an example:
Tire costs: Product cost, variable, direct material
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