QUESTION 2 Classify each of the following costs as being a P

QUESTION 2 Classify each of the following costs as being a PRODUCT or a PERIOD cost Utilities used in the factory cost to rent office equipment for the marketing department Cost to set up manufacturing equipment A Product B Period ? ? Wages paid to supervisors in the factory Commissions paid to sales personnel Salary of the Director of Accounting Research and Development costs to develop a new drugs for a pharmaceuitcal company Rent on the company\'s headquarters building QUESTION 3 Before these materials are used to manufacture its cars Toyota classifies steel glass and plastic as finished goods inventory raw matenals inventory work-in-process inventory merchandise inventory

Solution

question2:

product cost is the cost which is directly associated with the product.

period cost is the cost which cannot be directly associated with the product, but is incurred periodically.

question 3:

B.Raw material inventory.

steel glass and plastice are raw materials used in manufacture of finished product of toyota which is a car.

A.Product	Utilities used in factory
B.Period	cost to rent office equipment for the marketing department
C.Product	cost to setup manufacturing equipment
D.Product	wages paid to supervisors in the factory
E.Period cost	Commissions paid to sales personnel
F.Period cost	salary of the director of accounting
G.Period cost	research and development costs to develop a new drugs for a pharmaceutical company
H.Period cost	Rent on company\'s head quarters building