BRIEF EXERCISE I Classifying Manufacturing Cost ILO2] The PC Works assembles cus

Question

BRIEF EXERCISE I Classifying Manufacturing Cost ILO2] The PC Works assembles custom computers from components supplied by various manufacturers. The company is very small and its assembly shop and retail sales store are housed in a single facility in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred at the company. Required: For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufac- turing overhead, selling, or an administrative cost. I. The cost of a hard drive installed in a computer. 2. The cost of advertising in the Puget Sound Computer User newspaper. 3. The wages of employees who assemble computers from components. 4. Sales commissions paid to the company's salespeople. 5. The wages of the assembly shop's supervisor. 6. The wages of the company's accountant. 7. Depreciation on equipment used to test assembled computers before release to customers. 8. Rent on the facility in the industrial park.

Explanation / Answer

I will put an X to indicate the right category

Key:

DM- Direct Material

DL- Direct Labour

MOH- Manufacturing Overheads

SC-Selling Cost

AC-Administrative Cost

Sr No. Cost DM DL MOH SC AC 1 The cost of a hard drive Installed in a computer X 2 The cost of advertising in the Puget Sound… X 3 The wages of employees who assemble computers from components X 4 Sales commisions paid to the company's salespeople X 5 The wages of the assembly shop's salespeople X 6 The wages of the assembly company's accountant X 7 Depreciation on the equipment… X 8 Rent on the facility in the industrial park X

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