Classifying period costs and product costs Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers: Handle and shaft of edger Motor of edger Factory labor for workers assembling edgers Lubricant used on bearings in the edger (not traced to the product) Glue to hold the housing together Plant janitorial wages Depreciation on factory equipment Rent on plant Sales commissions Administrative salaries Plant utilities Shipping costs to deliver finished edgers to customers Requirements Describe the difference between period costs and product costs. Classify Langley’s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.
Classifying period costs and product costs Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers: Handle and shaft of edger Motor of edger Factory labor for workers assembling edgers Lubricant used on bearings in the edger (not traced to the product) Glue to hold the housing together Plant janitorial wages Depreciation on factory equipment Rent on plant Sales commissions Administrative salaries Plant utilities Shipping costs to deliver finished edgers to customers Requirements Describe the difference between period costs and product costs. Classify Langley’s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Classifying period costs and product costs Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers:
- Handle and shaft of edger
- Motor of edger
- Factory labor for workers assembling edgers
- Lubricant used on bearings in the edger (not traced to the product)
- Glue to hold the housing together
- Plant janitorial wages
- Depreciation on factory equipment
- Rent on plant
- Sales commissions
- Administrative salaries
- Plant utilities
- Shipping costs to deliver finished edgers to customers
Requirements
- Describe the difference between period costs and product costs.
- Classify Langley’s costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing
overhead.
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