The Cost of a Hard Drive Installed in a Computer

Exercise 1- 2 1. The cost of a hard drive installed in a computer: direct materials. 2. The cost of advertising in the newspaper: selling. Puget Sound Computer User 3. The wages of employees who assemble computers from components: direct labor. 4. Sales commissions paid to the company’s salespeople: selling. 5. The salary of the assembly shop’s supervisor: manufacturing overhead. 6. The salary of the company’s accountant: administrative. 7. Depreciation on equipment used to test assembled computers before release to customers: manufacturing overhead. 8. Rent on the facility in the industrial park: a combination of manufacturing overhead, selling, and administrative. The rent would most likely be prorated on the basis of the amount of space occupied by manufacturing, selling, and administrative operations. Exercise 1- 3 Product Cost 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Depreciation on salespersons’ cars ........................ Rent on equipment used in the factory .................. Lubricants used for machine maintenance ............. Salaries of personnel who work in the finished goods warehouse .............................................. Soap and paper towels used by factory workers at the end of a shift ............................................... Factory supervisors’ salaries.................................. Heat, water, and power consumed in the factory ... Materials used for boxing products for shipment overseas (units are not normally boxed) ............. Advertising costs .................................................. Workers’ compensation insurance for factory employees......................................................... Depreciation on chairs and tables in the factory lunchroom......................................................... The wages of the receptionist in the administrative offices............................................................... Cost of leasing the corporate jet used by the company's executives ........................................ The cost of renting rooms at a Florida resort for the annual sales conference ..................................... The cost of packaging the company’s product ........ Period Cost X X X X X X X X X X X X X X X Problem 1-23 Cost Item 1. Property taxes, factory ................................ 2. Boxes used for packaging detergent produced by the company *...................... 3. Salespersons’ commissions .......................... 4. Supervisor’s salary, factory .......................... 5. Depreciation, executive autos ...................... 6. Wages of workers assembling computers ..... 7. Insurance, finished goods warehouses ......... 8. Lubricants for production equipment ............ 9. Advertising costs......................................... 10. Microchips used in producing calculators ...... 11. Shipping costs on merchandise sold ............. 12. Magazine subscriptions, factory lunchroom ... 13. Thread in a garment factory ........................ 14. Executive life insurance ............................... 15. Ink used in textbook production ................ 16. Fringe benefits, materials handling workers 17. Yarn used in sweater production ............... 18. Wages of receptionist, executive offices..... Variable or Selling Fixed Cost Administrative Cost Manufacturing (Product) Cost Direct Indirect F V V F F V F V F V V F V F V V V F X X X X X X X X X X X X X X X X X X * Assume the boxes are part of the products, then direct manufacturing cost; how ever, if we assume the boxes are used to facilitate shipping, not part of t he product , then selling cost.