Trak Corporation incurred the following costs while manufacturing its bicycles.

Bicycle components
$100,000Advertising expense$45,000 Depreciation on plant60,000Property taxes on plant14,000 Property taxes on store7,500Delivery expense21,000 Labor costs of assembly-line workers110,000Sales commissions35,000 Factory supplies used13,000Salaries paid to sales clerks50,000

Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.

See the explanation below.

Explanation:

Too answer the question, each of the cost items is first explained as follows:

a. Direct materials cost: These materials and supplies that are used when a product is being manufactured.

b. Direct labor: This is labor that is involved in converting materials to finished good. They are directly involved in production.  

c. Manufacturing overhead: These are cost incurred in the process of producing a good.

d. Period costs: These are part of selling and administrative expenses.

Based on the above, each of the costs can be identified as follows:

Bicycle components  $100,000 = direct materials

Advertising expense $45,000 = period costs

Depreciation on plant 60,000 = manufacturing overhead

Property taxes on plant 14,000 = manufacturing overhead

Property taxes on store 7,500 = period costs

Delivery expense 21,000 = period costs

Labor costs of assembly-line workers 110,000 = direct labor

Sales commissions 35,000 = period costs

Factory supplies used 13,000 = direct materials

Salaries paid to sales clerks 50,000 = period costs