Question

Classify each of the following independent costs as a product or period costs and whether they are variable cost or fixed cost:

1. Depreciation using the units of production method on packaging equipment.
2. Sheet aluminum used in making airplanes.
3. Wages of assembly line workers.
4. Salaries of plant security guards.
5. Insurance for employees on the automotive assembly line.
6. Straight-line Depreciation on the corporate office building.
7. Factory heating costs.
8. Adverting costs incurred by Adams Cable Company.
9. Wages of finished goods quality inspectors at a breakfast cereal processor.
10. President’s Salary of a wheat mill.

Answer 1

Classification of costs

	Product costs	Period Costs	Variable	Fixed
Depreciation on packaging equipment	Yes		Yes
Sheet aluminum	Yes		Yes
Wages of assembly line workers	Yes		Yes
Salaries of plant security guards	yes			Yes
Insurance for employees for automobile assembly line	Yes		Yes
SLM depreciation on office building		Yes		Yes
Factory heating costs	yes			Yes
Advertising costs		Yes		Yes
Wages of finished goods quality inspectors	Yes			Yes
President salary		Yes		Yes