Exceptional Manufacturing Co wants to classify costs for the

Exceptional Manufacturing Co. wants to classify costs for the product produced at its facility. The company produces only one product at the facility and operates continually. The cost categories are:

      Product cost

      Prime cost

      Conversion cost

      Period cost

The following costs are found in the accounting records:

      a.   Quality control inspection wages

      b.   Raw material purchases

      c.    Sales commissions

      d.   Factory depreciation

      e.   Assembly wages

Required:

Assign each of the above costs to the most appropriate cost categories. Note costs can belong to more than one category.

Solution

a Quality control inspection wages Product cost Convesrion cost b Raw material purchase product cost prime cost c Sales commission Period cost d Factory depreciation product cost Conversion cost e Assembly wages product cost Conversion cost Prime cost