Chapter 1, Problem 12E

1)

To determine

Product Cost

• Product cost consists of direct and indirect costs.

• The direct costs include cost of materials used to produce goods, direct labor involved in manufacturing etc.

• The indirect costs include selling and distribution costs, administrative costs etc.

To Determine:

Cost of batteries as on April 30^th under:

1. Raw Materials
2. Work in Progress
3. Finished Goods
4. Cost of Goods Sold
5. Selling Expense

2)

To determine

Balance sheet and Income statement accounts

• Balance Sheet accounts refer to assets and liabilities. The balances for these accounts are carried forward from one financial year to another.

• Assets include finished goods, work in progress of goods manufactured, raw materials etc. Liabilities include Trade payables, Loans etc.

• Income statement accounts refer to incomes and expenses. The balances for these accounts are not carried forward from one financial year to another and are instead closed by transferring them to the income statement.

• Examples of such accounts include cost of goods sold and sales revenue.

To Determine:

If the following accounts are balance sheet or income statement accounts.

1. Raw Materials
2. Work in Progress
3. Finished Goods
4. Cost of Goods Sold
5. Selling Expense