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Indicate the cost category to which the item belongs.

Please look this over and let me know what you think.

The company intends to classify these costs and expenses into the following categories:
(a) direct materials, (b) direct labor, (c) manufacturing overhead, and (d) period costs.

Instructions
List the items (1) through (10). For each item, indicate the cost category to which it belongs.

Sota Company is a manufacturer of personal computers. Various costs and expenses
associated with its operations are as follows.

1. Property taxes on the factory building. Manufacturing Overhead
2. Production superintendents' salaries. Manufacturing Overhead (or Direct labor?)
3. Memory boards and chips used in assembling computers. Direct Materials
4. Depreciation on the factory equipment. Manufacturing Overhead (or Period Costs?)
5. Salaries for assembly line quality control inspectors. Direct Labor (or Manufacturing Overhead?)
6. Sales commissions paid to sell personal computers. Period Costs
7. Electrical components used in assembling computers. Direct Materials
8. Wages of workers assembling personal computers. Direct Labor
9. Soldering materials used on factory assembly lines. Manufacturing Overhead
10. Salaries for the night security guards for the factory building. Manufacturing Overhead

Solution Preview

Hi there,

Here are your answers:

1. C
2. C
3. A
4. D
5. C
6. D
7. A
8. B
9. C
10. C

Here are some definitions for your reference:

Overhead is the amount of resources used by an organization just to maintain existence also known as operational costs. Overhead costs are usually measured in monetary ...

$2.19