The Red Mill Inn incurs costs in three areas of its business operations. These three areas are the kitchen, lodging,and the gift shop. Preparing food in the kitchen creates "PRODUCT" costs similar to a manufacturing company - materials, labor,and overhead. Categorize the following kitchen costs as DIRECT MATERIALS, DIRECT LABOR or OVERHEAD 1. Dishtowels used to dry dishes and utensils2. Flour used to bake biscuits3. Fee for baking class taken by the cook4. Portion of fire insurance premium that applies to the kitchen5. Wages paid to kitchen workers6. Sugar used in the preparation of jellies7. Wages paid to the maintenance man to repair the oven8. The kitchen's share of the electric bill9. Butter used in baked goods10. Cookies cutters purchased to make holiday cookies

Following are selected costs of a company that manufactures computer chips. Classify each as either a product cost or a period cost. Then classify each of the product costs as direct material, direct labor, or overhead.

This list contains costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH).t Classify each of these items as direct materials, direct labor, or overhead. Glue used to attach labels to bottles containing a patented medicine. Compressed air used in operating paint sprayers for Student Painters, a company that paints houses and apartments. Insurance on a factory building and equipment. A production department supervisors salary. Rent on factory machinery. Iron ore in a steel mill. Oil, gasoline, and grease for forklift trucks in a manufacturing companys warehouse. Services of painters in building construction. Cutting oils used in machining operations. Cost of paper towels in a factory employees washroom. Payroll taxes and fringe benefits related to direct labor. The plant electricians salaries. Crude oil to an oil refinery. Copy editors salary in a book publishing company. Assume your classifications could be challenged in a court case. Indicate to your attorneys which of your answers for part a might be successfully disputed by the opposing attorneys and why. In which answers are you completely confident?

The following is a list of costs incurred by several manufacturing companies: a. Bonus for vice president of marketing b. Costs of operating a research laboratory c. Cost of unprocessed milk for a dairy d. Depreciation of factory equipment e. Entertainment expenses for sales representatives f. Factory supplies g. First-aid nurse for factory workersh. Health insurance premiums paid for factory workers i. Hourly wages of warehouse laborers j. Lumber used by furniture manufacturer k. Maintenance costs for factory equipment l. Microprocessors for a microcomputer manufacturer m. Packing supplies for products sold, which are insignificant to the total cost of the product n. Paper used by commercial printer o. Paper used in processing various managerial reports p. Protective glasses for factory machine operators q. Salaries of quality control personnel r. Sales commissions s. Seed for grain farmer t. Television advertisement u. Prebuilt transmissions for an automobile manufacturer v. Wages of a machine operator on the production line w. Wages of secretary of company controller x. Wages of telephone operators for a toll-free, customer hotline Instructions Classify each of the preceding costs as a product cost or period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. Use the following tabular headings for preparing your answer. Place an X in the appropriate column.

A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.

The Evendale Store is one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company’s stores.   Required: 1. What is the total amount of the costs listed above that are direct costs of the Apparel Department? 2. What is the total amount of the costs listed above that are direct costs of the Evendale Store? 3. What is the total amount of the Apparel Department’s direct costs that are also variable costs with respect to total departmental sales?

Listed below are costs found in various organizations.1. Property taxes, factory.2. Boxes used for packaging detergent produced by the company.3. Salespersons’ commissions.4. Supervisor’s salary, factory.5. Depreciation, executive autos.6. Wages of workers assembling computers.7. Insurance, finished goods warehouses.8. Lubricants for production equipment.9. Advertising costs.10. Microchips used in producing calculators.11. Shipping costs on merchandise sold.12. Magazine subscriptions, factory lunchroom.13. Thread in a garment factory.14. Billing costs.15. Executive life insurance.16. Ink used in textbook production.17. Fringe benefits, assembly-line workers.18. Yarn used in sweater production.19. Wages of receptionist, executive offices.Required:Prepare an answer sheet with column headings as shown below. For each cost item, indicate whetherit would be variable or fixed with respect to the number of units produced and sold; and then whetherit would be a selling cost, an administrative…

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Richard's Events provides catering services, among other services. The company has adopted activity-based costing (ABC) for the catering services. The ABC system classifies activities into two groups based on the cost driver used: Diners and Events. Each event is limited to 25 guests and requires four people to serve and clean up. Richard's Events offers two types of catered events—an informal, outside party and a formal, seated meal. The cost accountant at Richard's Events has developed the following cost-driver rates for the individual activities: Activities (and cost drivers) Informal Party Formal Dinner Advertising (events) $ 144 per event   $ 144 per event   Planning (events) 114 per event   174 per event   Renting equipment (events, diners) 84 per event plus 24 per diner 114 per event plus 36 per diner Obtaining insurance (events) 264 per event   504 per event   Serving (events) 264 per event   384 per event   Preparing food (diners) 36 per diner   48 per diner…

Richard's Events provides catering services, among other services. The company has adopted activity-based costing (ABC) for the catering services. The ABC system classifies activities into two groups based on the cost driver used: Diners and Events. Each event is limited to 25 guests and requires four people to serve and clean up. Richard's Events offers two types of catered events—an informal, outside party and a formal, seated meal. The cost accountant at Richard's Events has developed the following cost-driver rates for the individual activities: Activities (and cost drivers) Informal Party Formal Dinner Advertising (events) $ 134 per event   $ 134 per event   Planning (events) 104 per event   164 per event   Renting equipment (events, diners) 74 per event plus 19 per diner 104 per event plus 31 per diner Obtaining insurance (events) 254 per event   494 per event   Serving (events) 254 per event   374 per event   Preparing food (diners) 31 per diner   43 per diner…