Chapter 14, Problem 5E

To determine

Overhead:

Overheads are the cost and the expenses a company incurs of the production of a particular goods or services which are not directly related to the production. It does not include labor and direct material.

Direct Material Cost:

Direct material cost is the cost that a company incurs while manufacturing a certain product or service. It includes all the cost and expenses that are directly associated with the production such as raw materials.

Direct Labor Cost:

Direct labor cost is the cost that a company incurs in giving wages to the people that are directly associated with the production work.

Selling expenses:

Selling expenses are those expenses that are incurred by the company on selling a particular product or service.

General and administrative expenses:

General and administrative expenses are those expenses that are incurred by the company that are indirectly associated with the production such as admission fees, electricity expenses.

To classify: The statements as direct materials, direct labor, overhead, selling expenses or general and administrative expenses.