Required Indicate whether each of the following costs is a product cost or a per

Question

Required Indicate whether each of the following costs is a product cost or a period (selling and administrative) cost. Event Classification a. Cleaning supplies for the office. b. Freight on goods purchased for resale. c. Salary of the marketing director d. Freight on goods sold to customer with terms FOB destination. e. Utilities expense incurred for office building f. Advertising expense g. Insurance on vans used to deliver goods to customers. h. Salaries of sales supervisors. i. Monthly maintenance expense for a copier Goods purchased for resale

Explanation / Answer

a. Period Cost as these are not directly related to the product.

b. Product Cost as these are directly related to the product dealt in.

c. Period Cost as it form part of administrative cost.

d. Period cost as it is a parts of selling cost.

e. Period cost as it is administrative cost.

f. Period Cost as it is selling expense

g. Period Cost as it forms part of selling and distribution expense.

h. Period Cost as it is selling expense

i. Period Cost as it forms part of administrative cost.

j. Product Cost as it is an expense of direct nature.

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