Question

se the following data for answering questions 1 through 10. Harker Company manufactures DVD players and other similar electronic products. Indicate whether the given cost is a product cost or period cost AND whether its cost behavior is fixed, variable, or mixed by selecting the appropriate options. A cost should be considered as variable if it changes in proportion to change in number of DVD players produced and sold. As an example, commissions paid to sales staff would be classified as a period cost and variable.

1. Salaries paid to sales staff

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

2. Insurance cost of factory building

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

3. Insurance cost of factory building

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

4. Wages paid to production workers in assembly

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

5.Depreciation on furniture and equipment in company headquarters.

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

6. Utilities cost for factory; amount includes electricity for running machines and costs for heating and lights

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

7. Rent on warehouse used to store finished goods ready for sale.

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

8. Salary paid to company CEO

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

9. Salaries paid to supervisors working in the factory

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

10. Depreciation on factory building and equipment

	a.	Product cost
	b.	Period cost
	c.	Fixed cost
	d.	Variable cost
	e.	Mixed cost

Answer 1

						Product/Period		Variable/Fixed/Mixed
1. Salaries to sales staff						Period		Fixed
2. Insurance on factory building						Product		Fixed
3. Insurance on factory building						Product		Fixed
4. Wages paid to production workers						Product		Vvariable
5. Depreciaon on furnitute and equipment in headquarters						Period		Fixed
6. Utilities on factory						product		Mixed
7. Rent on warehouse						Period		Fixed
8. Salary paid to CEO						Period		Fixed
9. Salaries paid to suprvisors						Product		Fixed
10. Depreciation on factory building						Product		Fixed