Accounting 25th Edition by Carl Warren, James Reeve, Jonathan Duchac

Exercise 1

Classifying costs
The following is a list of costs that were incurred in the production and sale of lawn mowers:
a. Tires for lawn mowers.
b. Plastic for outside housing of lawn mowers.
c. Salary of factory supervisor.
d. Property taxes on the factory building and equipment.
e. License fees for use of patent for lawn mower blade, based on the number of lawn mowers produced.
f. Cost of advertising in a national magazine.
g. Salary of quality control supervisor who inspects each lawn mower before it is shipped.
h. Cash paid to outside firm for janitorial services for factory.
i. Attorney fees for drafting a new lease for headquarters offices.
j. Premiums on insurance policy for factory buildings.
k. Cost of boxes used in packaging lawn mowers.
l. Steel used in producing the lawn mowers.
m. Paint used to coat the lawn mowers, the cost of which is immaterial to the cost of the final product.
n. Commissions paid to sales representatives, based on the number of lawn mowers sold.
o. Payroll taxes on hourly assembly line employees.
p. Gasoline engines used for lawn mowers.
q. Hourly wages of operators of robotic machinery used in production.
r. Straight-line depreciation on the robotic machinery used to manufacture the lawn mowers.
s. Factory cafeteria cashier's wages.
t. Maintenance costs for new robotic factory equipment, based on hours of usage.
u. Telephone charges for company controller's office.
v. Electricity used to run the robotic machinery.
w. Steering wheels for lawn mowers.
x. Salary of vice president of marketing.
y. Engine oil used in mower engines prior to shipment.
z. Filter for spray gun used to paint the lawn mowers.
Instructions
Classify each cost as either a product cost or a 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. Use the following tabular headings for your answer, placing an "X" in the appropriate column.