Question

Scary Skull, a manufacturer, produces speakers for movie theaters. Listed below are selected cost items for the production of 600 units.

Classify each cost by filling in the blank with of the following:

• Product cost - direct material
• Product cost - direct labor
• Product cost - factory overhead
• Period cost - selling expense
• Period cost - administrative expense

Plastic for speaker casings

Rental cost on factory equipment

Electronics for speakers

Accounting staff salaries

Insurance on factory building

Sales manager's salary

Repairs on factory equipment

Marketing promotions

Advertising expense

Rental cost on retail showroom

Answer 1

Plastic for speaker casings	Product cost - direct material
Rental cost on factory equipment	Product cost - factory overhead
Electronics for speakers	Product cost - direct material
Accounting staff salaries	Period cost - administrative expense
Insurance on factory building	Product cost - factory overhead
Sales manager's salary	Period cost - selling expense
Repairs on factory equipment	Product cost - factory overhead
Marketing promotions	Period cost - selling expense
Advertising expense	Period cost - selling expense
Rental cost on retail showroom	Period cost - selling expense