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Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) Cost by Behavior Cost by Function Costs Variable Fixed Product Period 1. Plastic for casing 2. Wages of assembly workers 3. Property taxes on factory 4. Accounting staff salaries $ 17,000 17,000 %24

Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) Cost by Behavior Cost by Function Costs Variable Fixed Product Period 1. Plastic for casing 2. Wages of assembly workers 3. Property taxes on factory 4. Accounting staff salaries $ 17,000 17,000 %24

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Cost Classification Exercise #### Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) | Costs | Cost by Behavior | Cost by Function | |------------------------------------------------|-------------------|-------------------| | | Variable | Fixed | Product | Period | | 1. Plastic for casing | $17,000 | | $17,000 | | | 2. Wages of assembly workers | | | | | | 3. Property taxes on factory | | | | | | 4. Accounting staff salaries | | | | | | 5. Drum stands | | | | | | 6. Rent cost of equipment for sales staff | | | | | | 7. Upper management salaries | | | | | | 8. Annual flat fee for factory maintenance service | | | | | | 9. Sales commissions | | | | | | 10. Machinery depreciation, straight-line | | | | | This table helps in understanding how different costs are classified based on their nature (variable or fixed) and their role in the production process (product or period costs). - **Variable Costs:** Costs that change in proportion to the level of production activity. - **Fixed Costs:** Costs that remain constant regardless of the level of production activity. - **Product Costs:** Costs that are incurred to create a product and include direct materials, direct labor, and overhead. - **Period Costs:** Costs that are not tied directly to production (such as selling and administrative expenses) and are expensed in the period they are incurred.
Transcribed Image Text:### Cost Classification Exercise #### Required: 1. Classify each cost and its amount as (a) either variable or fixed and (b) either product or period. (The first cost is completed as an example.) | Costs | Cost by Behavior | Cost by Function | |------------------------------------------------|-------------------|-------------------| | | Variable | Fixed | Product | Period | | 1. Plastic for casing | $17,000 | | $17,000 | | | 2. Wages of assembly workers | | | | | | 3. Property taxes on factory | | | | | | 4. Accounting staff salaries | | | | | | 5. Drum stands | | | | | | 6. Rent cost of equipment for sales staff | | | | | | 7. Upper management salaries | | | | | | 8. Annual flat fee for factory maintenance service | | | | | | 9. Sales commissions | | | | | | 10. Machinery depreciation, straight-line | | | | | This table helps in understanding how different costs are classified based on their nature (variable or fixed) and their role in the production process (product or period costs). - **Variable Costs:** Costs that change in proportion to the level of production activity. - **Fixed Costs:** Costs that remain constant regardless of the level of production activity. - **Product Costs:** Costs that are incurred to create a product and include direct materials, direct labor, and overhead. - **Period Costs:** Costs that are not tied directly to production (such as selling and administrative expenses) and are expensed in the period they are incurred.
**Required information** **Problem 14-1A Cost computation, classification, and analysis LO C2, C3** *[The following information applies to the questions displayed below.]* Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $500 each. | Costs | |---------| | 1. Plastic for casing—$17,000 | | 2. Wages of assembly workers—$82,000 | | 3. Property taxes on factory—$5,000 | | 4. Accounting staff salaries—$35,000 | | 5. Drum stands (1,000 stands purchased)—$26,000 | | 6. Rent cost of equipment for sales staff—$10,000 | | 7. Upper management salaries—$125,000 | | 8. Annual flat fee for factory maintenance service—$10,000 | | 9. Sales commissions—$15 per unit | | 10. Machinery depreciation, straight-line—$40,000 |
Transcribed Image Text:**Required information** **Problem 14-1A Cost computation, classification, and analysis LO C2, C3** *[The following information applies to the questions displayed below.]* Listed here are the total costs associated with the 2017 production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $500 each. | Costs | |---------| | 1. Plastic for casing—$17,000 | | 2. Wages of assembly workers—$82,000 | | 3. Property taxes on factory—$5,000 | | 4. Accounting staff salaries—$35,000 | | 5. Drum stands (1,000 stands purchased)—$26,000 | | 6. Rent cost of equipment for sales staff—$10,000 | | 7. Upper management salaries—$125,000 | | 8. Annual flat fee for factory maintenance service—$10,000 | | 9. Sales commissions—$15 per unit | | 10. Machinery depreciation, straight-line—$40,000 |
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