Chapter 14, Problem 6E

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.

Product cost:

Product cost is the cost that has been incurred by a company on manufacturing or producing a particular product such as direct materials, directs labor.

Period cost:

Period cost is the cost that has been incurred by the business and is charged against the revenue within the same period.

Conversion cost:

Conversion cost is the cost that has been incurred by the business in converting the raw materials to the finished goods or services.

To categorize: The statements as product or prime cost and direct or indirect cost.