For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The cost of a hard drive installed in a computer. The cost of advertising in the Puget Sound Computer User newspaper. The wages of employees who assemble computers from components. Sales commissions paid to the company's salespeople. The salary of the assembly shop's supervisor. 1. 2. 3. 4. 5. 6. The salary of the company's accountant. 7. Depreciation on equipment used to test assembled computers before release to customers. 8. Rent on the facility in the industrial park.
For each cost, indicate whether it would most likely be classified as direct materials, direct labor, manufacturing overhead, selling, or an administrative cost. The cost of a hard drive installed in a computer. The cost of advertising in the Puget Sound Computer User newspaper. The wages of employees who assemble computers from components. Sales commissions paid to the company's salespeople. The salary of the assembly shop's supervisor. 1. 2. 3. 4. 5. 6. The salary of the company's accountant. 7. Depreciation on equipment used to test assembled computers before release to customers. 8. Rent on the facility in the industrial park.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:EXERCISE 1-2 Classifying Manufacturing Costs L01-2
The PC Works assembles custom computers from components supplied by various manufacturers.
The company is very small and its assembly shop and retail sales store are housed in a single facil-
ity in a Redmond, Washington, industrial park. Listed below are some of the costs that are incurred
at the company.
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Required:
For each cost, indicate whether it would most likely be classified as direct materials, direct labor,
manufacturing overhead, selling, or an administrative cost.
The cost of a hard drive installed in a computer.
1.
2.
3.
4.
5.
6.
7.
8.
The cost of advertising in the Puget Sound Computer User newspaper.
The wages of employees who assemble computers from components.
Sales commissions paid to the company's salespeople.
The salary of the assembly shop's supervisor.
The salary of the company's accountant.
Depreciation on equipment used to test assembled computers before release to customers.
Rent on the facility in the industrial park.
inter
Expert Solution
Introduction to terms
Direct material cost = It is the cost directly associated with the usage of raw material in the production of the product.
Direct Labor cost = It is the cost directly associated with the product in terms of labor used.
Manufacturing overhead cost = It refers to the indirect expenses directly related to the production of a product.
Selling cost = It is the cost of selling and promoting the product.
Administrative cost = It is the cost related to administrative functions of the business not related to the product.
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