Problem 1 Textbook Reference P21 Classify costs Total Block

Problem 1 (Textbook Reference: P2-1)- Classify costs Total Block, Inc. is considering a new sunscreen packet that contains a skin wipe particularly useful for Classify the following costs of this new product as direct materials, direct labor, manufacturing overhead, selling, or administrative. Use the second column in the table provided below to classify costs. with sunscreen on it. These would be Problem 2 (Textbook Reference: P2-2)-Classify items as product or period costs Classify the costs listed in Problem 2 as either product costs or period costs. Use the third column in the table provided below. Cost P2-1) Cost Classification P2-2) Product Cost or Period Cost a. President\'s salary Packages used to hold the skin c. Cleaning materials used to clean d. Wages of workers who package e. Cost of advertising the product b. Wi the skin wipe packages the product f. g. h. The salary of the supervisor of the worker who package the product Cost accountant\'s salary (the accountant works in the factory) Cost of a market research survey i. Sales commissions paid as a percent of sales Depreciation of administrative office building j.

Solution

Ans:-

I. Sales Commission paid as a percent of sales

j. Depreciation of administrative office building

Administrative Cost

Administrative Cost

Period Cost

Period cost

Explanation as to why it is classified as period cost or product cost-

Period Cost - These are the costs, which are not assigned to the products but are charged as expenses against the revenue of the period in which they are incurred. All non-manufacturing Cost s such as general and administrative expenses, selling and distribution expenses are recognised as period costs.

Product Cost - These are the costs which are associated with the purchase and sale of goods. In the production scenario, such costs are associated with the acquisition and conversion of materials and all other manufacturing inputs into finished product for sale. Hence, under marginal costing, variable manufacturing costs and under absorption costing, Total Manufacturing Costs (variable and fixed) constitute inventoriable or product costs.

Cost	(P2-1) Cost Classification	(P2-2) Product Cost or Period Cost
a. Presidents Salary	Administrative Cost	Period Cost
b. Packages used to hold the skin wipes	Manufacturing Cost	Product Cost
c. Cleaning materials used to clean the skin wipe packages	Direct Material Cost	Product Cost
d. Wages of workers who package the product	Direct Labour Cost	Product Cost
e. Cost of advertising the product	Selling Cost	Period Cost
f. The salary of the supervisor of the worker who package the product	Administrative Cost	Period Cost
g. Costs of accountants salary (the accountant works in the factory)	Manufacturing Cost	Period cost
h. Cost of a market research survey	Selling Cost	Product Cost
I. Sales Commission paid as a percent of sales j. Depreciation of administrative office building	Administrative Cost Administrative Cost	Period Cost Period cost