Chapter 2, Problem 2.9SE

Classify costs incurred by a dairy processing company (Learning Objective 4)

Each of the following costs pertains to Bailey Dairy Products Company, a dairy processing company. Classify each of the company’s costs as a period cost or a product cost. Further classify product costs as direct material (DM), direct labor (DL), or manufacturing overhead (MOH).

Cost	Period Cost or Product Cost?	DM, DL, or MOH?
1. Television advertisements for Bailey’s products
2. Lubricants used in running bottling machines
3. Research and development related to elimination of antibiotic residues in milk
4. Gasoline used to operate refrigerated trucks delivering finished dairy products to grocery stores
5. Company president’s annual bonus
6. Depreciation on refrigerated trucks used to collect raw milk from local dairy farmers
7. Plastic gallon containers in which milk is packaged
8. Property insurance on dairy processing plant
9. Cost of milk purchased from local dairy farmers
10. Depreciation on tablets used by sales staff
11. Wages and salaries paid to machine operators at dairy processing plant