Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 18, Problem P18.26APGA
Classifying period costs and product costs
Learning Objective 2
Lawlor, Inc. is the manufacturer of lawn care equipment The company incurs the following costs while manufacturing weed trimmers:
- Shaft and handle of weed trimmer
- Motor of weed trimmer
- Factory labor for workers assembling weed trimmers
- Nylon thread used by the weed trimmer (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 weed trimmers to customers
Requirements
- Describe the difference between period costs and product costs.
- Classify Lawlor'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.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Classifying period costs and product costs
Lawlor, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing weed trimmers:
• Shaft and handle of weed trimmer
• Motor of weed trimmer
• Factory labor for workers assembling weed trimmers
• Nylon thread used by the weed trimmer (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 weed trimmers to customers
Requirements
1. Describe the difference between period costs and product costs.
2. Classify Lawlor’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.
Click to watch the Tell Me More Learning Objective 1 video and then answer the questions below.
1. Which of the following manufacturers is most likely to use a process cost system?
Purse manufacturer
Sports drink manufacturer
Automobile manufacturer
Guitar manufacturer
2. Process and job order cost systems are similar in that both systems _______.
record and summarize product costs
classify product costs as direct materials, direct labor, and factory overhead
allocate factory overhead costs to products
All of these choices are correct.
Chapter 18 Solutions
Horngren's Accounting (12th Edition)
Ch. 18 - Prob. 1QCCh. 18 - Prob. 2QCCh. 18 - Dunaway Company reports the following costs for...Ch. 18 - Which of the following is a direct cost of...Ch. 18 - Which of the following is not part of...Ch. 18 - Which of the following accounts does a...Ch. 18 - Questions 7 and 8 use the data that follow....Ch. 18 - Questions 7 and 8 use the data that follow....Ch. 18 - World-class businesses use which of these systems...Ch. 18 - Prob. 10QC
Ch. 18 - What is the primary purpose of managerial...Ch. 18 - List six differences between financial accounting...Ch. 18 - Explain the difference between line positions and...Ch. 18 - Explain the differences between planning,...Ch. 18 - Prob. 5RQCh. 18 - Describe a service company, and give an example.Ch. 18 - Describe a merchandising company, and give an...Ch. 18 - How do manufacturing companies differ from...Ch. 18 - List the three inventory accounts used by...Ch. 18 - Explain the difference between a direct cost and...Ch. 18 - What are the three manufacturing costs for a...Ch. 18 - Give five examples of manufacturing overhead.Ch. 18 - What are prime costs? Conversion costs?Ch. 18 - What are product costs?Ch. 18 - How do period costs differ from product costs?Ch. 18 - How is cost of goods manufactured calculated?Ch. 18 - How does a manufacturing company calculate cost of...Ch. 18 - How does a manufacturing company calculate unit...Ch. 18 - How does a service company calculate unit cost per...Ch. 18 - How does a merchandising company calculate unit...Ch. 18 - Prob. S18.1SECh. 18 - Prob. S18.2SECh. 18 - Distinguishing between direct and indirect costs...Ch. 18 - Computing manufacturing overhead Learning...Ch. 18 - Identifying product costs and period costs...Ch. 18 - Computing cost of goods sold, merchandising...Ch. 18 - Computing cost of goods sold and operating income,...Ch. 18 - Prob. S18.8SECh. 18 - Prob. S18.9SECh. 18 - Prob. S18.10SECh. 18 - S18-11 Matching business trends...Ch. 18 - Prob. S18.12SECh. 18 - Prob. E18.13ECh. 18 - Prob. E18.14ECh. 18 - Prob. E18.15ECh. 18 - Prob. E18.16ECh. 18 - Identifying differences between service,...Ch. 18 - Prob. E18.18ECh. 18 - Computing cost of goods manufactured Learning...Ch. 18 - Prob. E18.20ECh. 18 - Prob. E18.21ECh. 18 - Prob. E18.22ECh. 18 - Prob. E18.23ECh. 18 - Prob. E18.24ECh. 18 - Prob. P18.25APGACh. 18 - Classifying period costs and product costs...Ch. 18 - Calculating cost of goods sold for merchandising...Ch. 18 - Prob. P18.28APGACh. 18 - Preparing a schedule of cost of goods manufactured...Ch. 18 - Prob. P18.30APGACh. 18 - Prob. P18.31APGACh. 18 - Prob. P18.32APGACh. 18 - Prob. P18.33BPGBCh. 18 - Prob. P18.34BPGBCh. 18 - Prob. P18.35BPGBCh. 18 - Prob. P18.36BPGBCh. 18 - Prob. P18.37BPGBCh. 18 - Prob. P18.38BPGBCh. 18 - Prob. P18.39BPGBCh. 18 - Prob. P18.40BPGBCh. 18 - Prob. P18.41CTCh. 18 - Prob. P18.42CPCh. 18 - Prob. 18.1TIATCCh. 18 - Prob. 18.1DCCh. 18 - Prob. 18.1EI
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- This list contains costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH).t Classify each of these items as direct materials, direct labor, or overhead. Glue used to attach labels to bottles containing a patented medicine. Compressed air used in operating paint sprayers for Student Painters, a company that paints houses and apartments. Insurance on a factory building and equipment. A production department supervisors salary. Rent on factory machinery. Iron ore in a steel mill. Oil, gasoline, and grease for forklift trucks in a manufacturing companys warehouse. Services of painters in building construction. Cutting oils used in machining operations. Cost of paper towels in a factory employees washroom. Payroll taxes and fringe benefits related to direct labor. The plant electricians salaries. Crude oil to an oil refinery. Copy editors salary in a book publishing company. Assume your classifications could be challenged in a court case. Indicate to your attorneys which of your answers for part a might be successfully disputed by the opposing attorneys and why. In which answers are you completely confident?arrow_forwardAssigning Costs to a Cost Object, Direct and Indirect Costs Hummer Company uses manufacturing cells to produce its products (a cell is a manufacturing unit dedicated to the production of subassemblies or products). One manufacturing cell produces small motors for lawn mowers. Suppose that the motor manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell. a. Salary of cell supervisor b. Power to heat and cool the plant in which the cell is located c. Materials used to produce the motors d. Maintenance for the cells equipment (provided by the maintenance department) e. Labor used to produce motors f. Cafeteria that services the plants employees g. Depreciation on the plant h. Depreciation on equipment used to produce the motors i. Ordering costs for materials used in production j. Engineering support (provided by the engineering department) k. Cost of maintaining the plant and grounds l. Cost of the plants personnel office m. Property tax on the plant and land Required: Classify each of the costs as a direct cost or an indirect cost to the motor manufacturing cell.arrow_forwardPocket Umbrella, Inc. is considering producing a new type of umbrella. This new pocket-sized umbrella would fit into a coat pocket or purse. Classify the following costs of this new product as direct materials, direct labor, manufacturing overhead, or selling and administrative. Cost of advertising the product Fabric used to make the umbrellas Maintenance of cutting machines used to cut the umbrella fabric so it will fit the umbrella frame Wages of workers who assemble the product Presidents salary The salary of the supervisor of the people who assemble the product Wages of the product tester who stands in a shower to make sure the umbrellas do not leak Cost of market research survey Salary of the companys sales managers Depreciation of administrative office buildingarrow_forward
- example paper for this weeks individual project This list contains costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH). Classify each of these items as direct materials, direct labor, or overhead, and provide the rationale for your classification decision. Glue used to attach labels to bottles containing a patented medicine. Compressed air used in operating paint sprayers for Student Painters, a company that paints houses and apartments. Insurance on a factory building and equipment. A production department supervisor’s salary. Rent on factory machinery. Iron ore in a steel mill. Oil, gasoline, and grease for forklift trucks in a manufacturing company’s warehouse. Services of painters in building construction. Cutting oils used in machining operations. Cost of paper towels in a factory employees’ washroom. Payroll taxes and fringe benefits related to direct labor. The plant electricians’ salaries. Crude…arrow_forwardE-LEARNING SERVICES SQU LIBRARIES -LEARNING SYSTEM (ACADEMIC) Process costing: Time left 1:55:02 O a. allocates applied manufacturing overhead cost to product cost. O b. is normally used by companies which produce shoes. O C. All the given answers are correct. O d. uses the manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. O e. assigns direct materials cost, direct labor cost, and manufacturing overhead costs to products to compute product cost per unit. Company XYZ made total sales revenue of $200,000. The variable manufacturing costs were $75,000 while the fixed manufacturing costs were $20,000. The variable selling and administrative expenses were $45,000 while the fixed selling and administrative expenses were $10,000. How much was the total contribution margin ($)? O a. 125,000 O b. 105,000 Fi O C. 145,000 O d. None of the given answers O e. 80,00Oarrow_forwardeBook Show Me How Question Content Area Multiple Production Department Factory Overhead Rate Method Handy Leather, Inc., produces three sizes of sports gloves: small, medium, and large. A glove pattern is first stenciled onto leather in the Pattern Department. The stenciled patterns are then sent to the Cut and Sew Department, where the glove is cut and sewed together. Handy Leather uses the multiple production department factory overhead rate method of allocating factory overhead costs. Its factory overhead costs were budgeted as follows: Pattern Department overhead $111,300 Cut and Sew Department overhead 182,000 Total $293,300 The direct labor estimated for each production department was as follows: Pattern Department 2,100 direct labor hours Cut and Sew Department 2,600 Total 4,700 direct labor hours Direct labor hours are used to allocate the production department overhead to the products. The direct labor hours per unit for each product for…arrow_forward
- Nizam Company produces speaker cabinets. Recently, Nizam switched from a traditional departmental assembly line system to a manufacturing cell in order to produce the cabinets. Suppose that the cabinet manufacturing cell is the cost object. Assume that all or a portion of the following costs must be assigned to the cell: a. Depreciation on electric saws, sanders, and drills used to produce the cabinets b. Power to heat and cool the plant in which the cell is located c. Salary of cell supervisor d. Wood used to produce the cabinet housings e. Maintenance for the cells equipment (provided by the maintenance department) f. Labor used to cut the wood and to assemble the cabinets g. Replacement sanding belts h. Cost of janitorial services for the plant i. Ordering costs for materials used in production j. The salary of the industrial engineer (she spends about 20 percent of her time on work for the cell) k. Cost of maintaining plant and grounds l. Cost of plants personnel office m. Depreciation on the plant n. Plant receptionists salary and benefits Required: Identify which cost assignment method would likely be used to assign the costs of each of the preceding activities to the cabinet manufacturing cell: direct tracing, driver tracing, or allocation. When driver tracing is selected, identify a potential activity driver that could be used for the tracing.arrow_forwardView Policies Current Attempt in Progress Classify the following costs as productor period costs by selecting an "X" in the appropriate columns. Cost of pineapple at Dole Pineapple Salary of production supervisor at Nestles Chocolate Salary of security guard at Ethan Allen Furniture factory Wages of assembly line workers at Slim-Fast production plant Cost of shipping goods for goods ordered online from JCPenney Cost of lubricant used on automobile door hinges at Toyota factory Cost of glue used to attach label to jars at Smuckers Cost of plastic bottles used to bottle Coca-Cola Cost of mustard used at Joe's Hot Dog Stand Salary of Joe, who makes hot dogs at Joe's Hot Dog Stand eTextbook and Media Save for Later Direct Material > > > > > > Attempts: 0 of 4 used Period Cost > > > Submit Answerarrow_forwardProducts versus Services, Cost Assignment Holmes Company produces wooden playhouses. When a customer orders a playhouse, it is delivered in pieces with detailed instructions on how to put it together. Some customers prefer that Holmes put the playhouse together. Therefore, these customers purchase the playhouse, as well as pay an additional fee for Holmes to install the playhouse. Holmes then pulls two workers off the production line and sends them to construct the playhouse on site. Required: 1. What two products does Holmes sell? Classify each one as a product or a service. 2. CONCEPTUAL CONNECTION Do you think Holmes assigns costs individually to each product or service? Why or why not? 3. CONCEPTUAL CONNECTION Describe the opportunity cost of the installation process.arrow_forward
- Stan is opening a coffee shop next to Big State University. He knows that controlling his costs will be important to the success of the shop. He will not be able to work all the hours the shop is open, so the employees will need some guidelines to perform their jobs correctly. After talking to an accounting professor, he decides he needs a standard cost system for his shop. Describe the process Stan should follow in setting his standards for materials and labor.arrow_forwardClassifying costsThe following is a list of costs that were incurred in the production andsale of lawn mowers: a. Premiums on insurance policy for factory buildingsb. Tires for lawn mowersc. Filter for spray gun used to paint the lawn mowersd. Paint used to coat the lawn mowers, the cost of which isimmaterial to the cost of the final product e. Plastic for outside housing of lawn mowersf. Salary of factory supervisorg. Hourly wages of operators of robotic machinery used inproduction h. Engine oil used in mower engines prior to shipmenti. Salary of vice president of marketingj. Property taxes on the factory building and equipmentk. Cost of advertising in a national magazine1. Gasoline engines installed in the lawn mowers m. Electricity used to run the robotic machineryn. Straight-line depreciation on the robotic machinery used tomanufacture the lawn mowerso. Salary of quality control supervisor who inspects each lawnmower before it is shipped p. Attorney fees for drafting a new lease…arrow_forwardCost Accounting_ADM3346 CAPSTONE EXERCISE Chapter 18 Toddler Toys produces toy construction vehicles for young children. Plastic pieces are moulded in the plastics department. The pieces are transferred to the assembly department, where direct materials are added after some assembly has been done. For example, plastic pieces of road graders are put together, then the blades and wheel assemblies are added, and finally some details are painted on the sides and back. The direct materials are added in the assembly department when the process is 75% complete. Beginning inventory 80% complete and ending inventory is 25% complete. Following are data for August: Beginning inventory costs for the assembly department: Transferred in $4,000 Direct materials 2,000 Conversion costs 1,600 Total cost $7,600 Costs incurred in the assembly department during current period: Transferred in $36,000 Direct materials 18,000 Conversion costs 16,000 Total cost $70,000 Physical units in the assembly…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cost Classifications - Managerial Accounting- Fixed Costs Variable Costs Direct & Indirect Costs; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=QQd1_gEF1yM;License: Standard Youtube License