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    Cost Classifications

    The following are costs associated with manufacturing firms, merchandising firms, or service firms:
    a. Miscellaneous materials used in production
    b. Salesperson's commission in a real estate firm
    c. Administrators' salaries for a furniture wholesaler
    d. Administrators' salaries for a furniture manufacturer
    e. Freight costs associated with acquiring inventories for a grocery store
    f. Office manager's salary in a doctor's office
    g. Utilities for the corporate offices of a toy manufacturer
    h. Line supervisor's salary for a clothing manufacturing firm
    i. Training seminar for sales staff of a service firm
    j. Fuel used in a trucking firm
    k. Paper used at a printing business
    l. Oil for machinery at a plastics manufacturing firm
    m. Food used at a restaurant
    n. Windshields used for a car manufacturer

    Classify the costs as (1) product or period; (2) variable or fixed; and (3) for those that are product
    costs, as direct materials, direct labor, or manufacturing overhead. Write "not applicable
    (N/A)" if a category doesn't apply.

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    Solution Preview

    The following are costs associated with manufacturing firms, merchandising firms, or service firms:

    a. Miscellaneous materials used in production
    Product and variable

    b. Salesperson's commission in a real estate firm
    Fixed and NA as it's a Selling overhead

    c. Administrators' salaries for a furniture wholesaler
    Period and fixed

    d. Administrators' salaries for a furniture ...

    Solution Summary

    This discusses the concept of costs such as period cost, fixed cost, variable cost, direct cost and indirect cost with the help of examples

    $2.49

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