Cost Terms, Concepts and Classifications
Exercise 2
For each of the following costs incurred in a manufacturing operation, indicate whether the costs would be fixed or variable (F or V) and whether they would be period costs or product costs (P or R, respectively) under full-absorption costing.
a. Transportation-in costs on materials purchased.
b. Assembly-line worker’s wages.
c. Property taxes on work in process inventories.
d. Salaries of top executives in the company.
e. Overtime premium for assembly workers.
f. Sales commissions.
g. Sales personnel office rental.
h. Production supervisory salaries.
i. Controller’s office supplies.
j. Executive office heat and air conditioning.
k. Executive office security personnel.
l. Supplies used in assembly work.
m. Factory heat and air conditioning.
n. Power to operate factory equipment.
o. Depreciation on furniture for sales staff.
p. Varnish used for finishing product.
q. Marketing personnel health insurance.
r. Packaging materials for finished product.
s. Salary of the quality control manager who checks work on the assembly line.
t. Assembly-line workers’ dental insurance.
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