Chapter 16: Q16-5SE-d (page 886)
Identifying product costs and period costs Classify each cost of a paper manufacturer as either a product cost or a period cost:
d. Salaries of the company’s top executives.
The salaries of company’s top executives will come under the period cost.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Comparing managerial accounting and financial accounting
For each of the following, indicate whether the statement relates to managerial accounting (MA) or financial accounting (FA):
e. Reports audited annually by independent certified public accountants
Identify the following characteristics as primarily related to financial accounting (FA) or managerial accounting (MA): 1. Helps creditors make lending decisions
Match the definition to the key term.
13. Triple bottom line
14. Value chain
15. Just-in-time management
16. Enterprise resource planning
17. Total quality management
a. A cost management system in which a company produces products just in time to satisfy needs.
b. A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services, while meeting organizational goals throughout the value chain.
c. Software system that can integrate all of a company’s functions, departments, and data into a single system.
d. Evaluating a company’s performance by its economic (profits), social (people), and environmental (planet) impact.
e. Includes all activities that add value to a company’s products and services
List the three inventory accounts used by manufacturing companies, and describe each.
Classifying period costs and product costs
Langley, Inc. is the manufacturer of lawn care equipment. The company incurs the following costs while manufacturing edgers:
• Handle and shaft of edger
• Motor of edger
• Factory labor for workers assembling edgers
• Lubricant used on bearings in the edger (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 edgers to customers
Requirements
1. Describe the difference between period costs and product costs.
2. Classify Langley’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.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
