COST TERMS

1. Porter Company manufactures wood tables. Classify each cost, as follows (more than one classification may apply.): a.Variable Cost........ b.Fixed Cost......c. Period Cost.........d. Direct Materials........e. Direct Labor.....f. Mfg Overhead

1. Cost of wood used in tables. 6. Salary of company president, $100,000 per year.
2. Labor cost to assemble a table, @ $40 per table. 7. Advertising cost @ $250,000 per year.
3. Salary of factory supervisor, $35,000 per year. 8. Commissions paid to salespersons, $30 per table.
4. Electricity to produce tables, @ $2 per machine hour.  
5. Depreciation on machines used for tables, $10,000/year.  

1. a,d ........2.a,e ........3.b,f .......4.a,f ........5.b,f........6.b,c ......7.b,c ......8.a,c

2. Giant Company manufactures bicycles. Classify each of the following costs using these codes (more than one code may apply). a.Direct Materials......b. Direct Labor......c. Manufacturing Overhead......d. Period Costs......e.Prime Costs......f.Conversion Costs

1. Rent on manufacturing equipment @ $2,000 per mo. 8. Miscellaneous lubricants, solder @ $1.20 per bike.
2. Insurance on factory building, $750 per month. 9. Property taxes on manufacturing building, $2400/yr.
3. Raw materials (tires, frames, etc.) $80/bicycle 10. Manufacturing supervisor's salary, $3,000/month
4. Utility costs in the factory, $1,000 per month. 11. Advertising for the bicycles, $30,000/year.
5. Supplies for the administrative office, $800 per month. 12. Sales commissions, $10.00 per bicycle.
6. Wages for assembly line workers, $30 per bicycle. 13. Depreciation on factory equipment.
7. Depreciation on president's computer, $650/month.  

3. Wicklow Company manufactures computers. Classify each of the following costs into one of the following categories.a.Direct Material.........b. Direct Labor........c. Manufacturing Overhead.......d. Period Cost

1. Sales commissions for those selling computers. 6. Property taxes on the factory.
2. Depreciation on factory building. 7. Production superintendent's salary.
3. Wages of workers building the computers. 8. Memory boards and chips used in the computers.
4. Soldering materials used in the assembly lines. 9. Depreciation on the factory equipment.
5. Salary for the night security guard at the factory.  

4. Galway Corporation manufactures furniture. Classify each cost item into one of these categories: a.direct materials....b.direct labor.....c. manufacturing overhead

1. Depreciation on the factory machinery. 8. Property taxes on the factory building.
2. Glue, nails, paint, and small parts used in production. 9. Factory repairs.
3. Wages paid to assembly line workers. 10. Factory utilities cost.
4. Factory supervisor's salary. 11. Cost of idle time for assembly line workers.
5. Insurance on machines in the factory. 12. Cost of fringe benefits for assembly line workers.
6. Salary for the night security guard in the factory. 13. Overtime premium for assembly line workers.
7. Wood used in the furniture.  

5. Indicate whether each of the following costs for an automobile manufacturer would be considered....a. direct materials....b.direct labor.......c. manufacturing overhead

1. Windshield 5. Factory machinery lubricants
2. Wages of assembly line workers 6. Tires
3. Engine 7. Salary of painting supervisor
4. Depreciation on factory machinery 8. Steering wheel