Exercise 103 Trak Corporation incurred the following costs w

Exercise 10-3 Trak Corporation incurred the following costs while manufacturing its bicycles Bicycle components Depreciation on plant Property taxes on store Labor costs of assembly-line workers 110,000 Sales commissions Factory supplies used $45,000 14,000 21,000 35,000 50,000 100,000 Advertising expense 60,000 Property taxes on plant 7,500 Delivery expense 13,000 Salaries paid to sales clerks Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs. Bicycle components Depreciation on plant Property taxes on store Labor costs of assembly-line workers Factory supplies used Advertising expense Property taxes on plant Delivery expense Sales commissions Salaries paid to sales clerks

Solution

(a) 1. Bicycle components - Direct materials

2. Depreciation on plant - Manufacturing overhead

3. Property taxes on store - Period costs

4. Labor costs of assembly-line workers - Direct labor

5. Factory supplies used - Manufacturing overhead

6. Advertising expense - Period costs

7. Property taxes on plant - Manufacturing overhead

8. Delivery expense - Period costs

9. Sales commissions - Period costs

10. Salaries paid to sales clerks - Period costs