Identify the following costs as a product cost or a period cost for a magazine publisher.

Identify the following costs as a product cost or a period cost for a magazine publisher.

a. Sales salaries
b. Paper used for the magazine
c. Maintenance on printing machines
d. Depreciation expense—corporate headquarters

Answer:
a. Period cost
b. Product cost
c. Product cost
d. Period cost



Identify the following costs as a product cost or a period cost for an automobile manufacturer.

a. Steel
b. Wages of employees that operate painting equipment
c. Rent on office building
d. Sales staff salaries

Answer:
a. Product cost
b. Product cost
c. Period cost
d. Period cost

Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a magazine publisher

Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a magazine publisher.

a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine
d. Maintenance on printing machines

Answer:
a.    P
b.    B
c.    C (or P if significant)
d.    C


Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for a magazine publisher.

a. Staples used to bind magazines
b. Wages of printing machine employees
c. Maintenance on printing machines
d. Paper used in the magazine

Answer:
a.    DM (or FO if the cost is immaterially small)
b.    DL
c.    FO
d.    DM


Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer.

a. Wages of employees that operate painting equipment
b. Wages of the plant supervisor
c. Steel
d. Oil used for assembly line machinery

Answer:
a.    DL
b.    FO
c.    DM
d.    FO