Classifying costs – management accounting

Classifying Costs

The following is a list of costs incurred by several manufacturing companies:

Classify each of the following costs as product cost or period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense:

a-x. Product costs are costs associated with the product. Period costs are selling and administrative expenses.

Direct materials are the costs of any material integral to the finished product. Employee wages integral to the finished product are direct labor. Factory overhead costs are manufacturing costs that are neither direct materials nor direct labor.

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