1. Product costs and period costs The costs that follow were extracted from the
ID: 2364407 • Letter: 1
Question
1. Product costs and period costs The costs that follow were extracted from the accounting records of several different manufacturers: 1. Weekly wages of an equipment maintenance worker 2. Marketing costs of a soft drink bottler 3. Cost of sheet metal in a Honda automobile 4. Cost of president's subscription to Fortune magazine 5. Monthly operating costs of pollution control equipment used in a steel mill 6. Weekly wages of a seamstress employed by a jeans maker 7. Cost of compact discs (CDs) for newly recorded releases of Rush, Billy Joel, and Bryan Adams a. Determine which of these costs are product costs and which are period costs. b. For the product costs only, determine those that are easily traced to the finished product and those that are not.Explanation / Answer
Weekly wages of an equipment maintenance workerlabor costs comes under product cost2. Marketing costs of a soft drink bottlermarketing cost is not material or labor or direct related to manufacturing.its a period cost3. Cost of sheet metal in a Honda automobileproduct cost4. Cost of president's subscription to Fortune magazineperiod cost as it includes all other costs beside manufacturing5. Monthly operating costs of pollution control equipment used in a steel millproduct cost as operation
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