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    Identification of product cost (direct or indirect) and period cost.

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    EXERCISE 16.3
    Indicate whether each of the following should be considered a product cost or a period cost. If
    you identify the item as a product cost, also indicate whether it is a direct or an indirect cost. For
    example, the answer to item 0 is "indirect product cost." Begin with item a.

    0. Property taxes on factory building.

    a. Cost of disposal of hazardous waste materials to a chemical plant.

    b. Amounts paid by a mobile home manufacturer to a subcontractor who installs plumbing in each
    mobile home.

    c. Depreciation on sales showroom fixtures.

    d. Salaries of security guards in an administrative office building.

    e. Salaries of factory security guards.

    f. Salaries of office workers in the credit department.

    g. Depreciation on the raw materials warehouse.

    h. Income taxes on a profitable manufacturing company.

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    Solution Preview

    Note: Answer to each question is highlighted in yellow in front of the question (Please open the attachment).

    a. Cost of disposal of hazardous waste materials to a chemical plant = ...

    Solution Summary

    The expert identifies the product cost as direct or indirect, and period cost. The cost of hazardous waste materials to a chemical plant is determined.