Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
a. Salaries of scientists studying ways to speed forest growth.
The salaries of scientists will come under the period cost.
The period cost is defined as the operating costs which are expensed in the particular accounting period in which it is incurred.
The correct option is Period cost.
In this case, the company is paying salaries to the scientists who are studying ways to speed up forest growth. This is not an expense that is related to the production of goods. It is an expense that is recorded when it is incurred
Computing cost of goods sold, merchandising company
Use the following information for The Windshield Helper, a retail merchandiser of auto windshields, to compute the cost of goods sold:
Web Site Maintenance $ 7,900
Delivery Expense 400
Freight In 2,400
Ending Merchandise Inventory 5,500
Marketing Expenses 10,700
Beginning Merchandise Inventory 8,600
Making ethical decisions
Sue Peters is the controller at Vroom, a car dealership. Dale Miller recently has been hired as the bookkeeper. Dale wanted to attend a class in Excel spreadsheets, so Sue temporarily took over Dale’s duties, including overseeing a fund used for gas purchases before test drives. Sue found a shortage in the fund and confronted Dale when he returned to work. Dale admitted that he occasionally uses the fund to pay for his own gas. Sue estimated the shortage at $450.
Requirements 1. What should Sue Peters do?
Computing manufacturing overhead
Sunglasses Unlimited Company manufactures sunglasses. Following is a list of costs the company incurred during May. Use the list to calculate the total manufacturing overhead costs for the month.
Glue for frames $ 250
Depreciation on company cars used by sales force 4,000
Plant depreciation 7,500
Interest Expense 1,500
Company president’s salary 24,500
Plant foreman’s salary 3,500
Plant janitor’s wages 1,300
Oil for manufacturing equipment 150
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