Chapter 2, Problem 27E

Basic Concepts

For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (F) or variable (V) and whether they are most likely period costs (P) or product costs (M) under full absorption costing:

1. a.      Depreciation on the building for administrative staff offices.
2. b.      Cafeteria costs for the factory.
3. c.       Overtime pay for assembly workers.
4. d.      Transportation-in costs on materials purchased.
5. e.       Salaries of top executives in the company.
6. f.        Sales commissions for sales personnel.
7. g.      Assembly line workers’ wages.
8. h.      Controller’s office rental.
9. i.        Administrative support for sales supervisors.
10. j.        Energy to run machines producing units of output in the factory.