EXERCISE 1-17 Classifying Variable and Fixed Costs and Product and Period Costs L01-3, L01-4 Below are listed various costs that are found in organizations. Managerial Accounting and Cost Concepts. 1. Hamburger buns in a Wendy's restaurant. 2. Advertising by a dental office. 3. Apples processed and canned by Del Monte. 4. Shipping canned apples from a Del Monte plant to customers. 5. Insurance on a Bausch & Lomb factory producing contact lenses. 6. Insurance on IBM's corporate headquarters. 7. Salary of a supervisor overseeing production of printers at HP. 8. Commissions paid to automobile salespersons. 9. Depreciation of factory lunchroom facilities at a General Electric plant. 10. Steering wheels installed in BMWs. Required: Using the table shown below, describe each of the costs mentioned above in two ways. In terms of cost classifications for predicting cost behavior (column 1), indicate whether the cost is fixed or variable with respect to the number of units produced and sold. With respect to cost classifications for preparing financial statements (column 2), indicate whether the item is a product cost or period cost (selling and administrative cost). Cost Item (1) Predicting Cost Behavior Cost Classifications for: (2) Preparing Financial Statements

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EXERCISE 1-17 Classifying Variable and Fixed Costs and Product and Period Costs L01-3, LO1-40
Below are listed various costs that are found in organizations.
1. Hamburger buns in a Wendy's restaurant.
2. Advertising by a dental office.
3. Apples processed and canned by Del Monte.
4. Shipping canned apples from a Del Monte plant to customers.
5. Insurance on a Bausch & Lomb factory producing contact lenses.
6. Insurance on IBM's corporate headquarters.
7. Salary of a supervisor overseeing production of printers at HP.
8. Commissions paid to automobile salespersons.
9. Depreciation of factory lunchroom facilities at a General Electric plant.
10. Steering wheels installed in BMWs.
Required:
Using the table shown below, describe each of the costs mentioned above in two ways. In terms of
cost classifications for predicting cost behavior (column 1), indicate whether the cost is fixed or
variable with respect to the number of units produced and sold. With respect to cost classifications
for preparing financial statements (column 2), indicate whether the item is a product cost or period
cost (selling and administrative cost).
Cost Item
Managerial Accounting and Cost Concepts
noundunud
30 annot nodibini) temot
1101
(1)
demic Predicting
Cost Behavior
SECRETARI
Cost Classifications for:
sotooni and W
(2)
Preparing Financial
Statements
MA(60)
Transcribed Image Text:EXERCISE 1-17 Classifying Variable and Fixed Costs and Product and Period Costs L01-3, LO1-40 Below are listed various costs that are found in organizations. 1. Hamburger buns in a Wendy's restaurant. 2. Advertising by a dental office. 3. Apples processed and canned by Del Monte. 4. Shipping canned apples from a Del Monte plant to customers. 5. Insurance on a Bausch & Lomb factory producing contact lenses. 6. Insurance on IBM's corporate headquarters. 7. Salary of a supervisor overseeing production of printers at HP. 8. Commissions paid to automobile salespersons. 9. Depreciation of factory lunchroom facilities at a General Electric plant. 10. Steering wheels installed in BMWs. Required: Using the table shown below, describe each of the costs mentioned above in two ways. In terms of cost classifications for predicting cost behavior (column 1), indicate whether the cost is fixed or variable with respect to the number of units produced and sold. With respect to cost classifications for preparing financial statements (column 2), indicate whether the item is a product cost or period cost (selling and administrative cost). Cost Item Managerial Accounting and Cost Concepts noundunud 30 annot nodibini) temot 1101 (1) demic Predicting Cost Behavior SECRETARI Cost Classifications for: sotooni and W (2) Preparing Financial Statements MA(60)
Expert Solution
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Product costs are those directly related to the production of a product or service intended for sale.

Period costs are all other indirect costs that are incurred in production. 

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