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Classification of product costs vs period costs

The following is a list of costs that were incurred in the production and sale of boats:

a. Cost of metal hardware for boats, such as ornaments and tie-down grasps.
b. Power used by sanding equipment.
c. Yearly cost of maintenance contract for robotic equipment.
d. Premiums on business interruption insurance in case of natural disaster.
e. Cost of normal scrap from defective hulls.
f. Masks for use by sanders in smoothing boat hulls.
g. Cost of paving the employee parking lot.
h. Hourly wages of assembly-line workers
i. Oil to lubricate factory equipment.
j. Straight-line depreciation of factory equipment.
k. Wood paneling for use in interior boat trim.
l. Commissions to sales representatives, based upon the number of boats sold.
m. Steering wheels
n. Special advertising campaign in Bass World.
o. Cost of boat for "grand prize" promotion in local bass tournament.
p. Memberships for key executives in the Bass World Association.
q. Navigation and fishing instruments for boats.
r. Cost of electrical wiring for boats.
s. Executive end-of-year bonuses.
t. Salary of shop supervisor.
u. Decals for boat hulls.
v. Annual fee for Jim Bo Wilks, a famous fisherman, to promote the boats.
w. Legal department costs for the year.
x. Paint for the boats.
y. Salary of president of company.
z. Fiberglass for producing the boat hull.


Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct material cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular heading for your answer, placing an "X" in the appropriate column.

_______________Product Cost_______________ ______Period Cost______

Direct Materials Direct labor Factory Selling Admin
Cost Cost Overhead Cost Expense Expense


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_______________Product Cost_______________ ______Period ...

Solution Summary

In the production and sale of boats, the list of costs were classified as specified in the problem.