Chapter 18, Problem P18.26APGA

Classifying period costs and product costs
Learning Objective 2
Lawlor, Inc. is the manufacturer of lawn care equipment The company incurs the following costs while manufacturing weed trimmers:

• Shaft and handle of weed trimmer
• Motor of weed trimmer
• Factory labor for workers assembling weed trimmers
• Nylon thread used by the weed trimmer (not traced to the product)
• Glue to hold the housing together
• Plant janitorial wages
• Depreciation on factory equipment
• Rent on plant
• Sales commissions
• Administrative salaries
• Plant utilities
• Shipping costs to deliver finished weed trimmers to customers

Requirements

1. Describe the difference between period costs and product costs.
2. Classify Lawlor's costs as period costs or product costs. If the costs are product costs, further classify them as direct materials, direct labor, or manufacturing overhead.