Consider the following costs that were incurred during the current year: 1. Tire costs incurred

2. Sales commissions paid to the sales force

3. Wood glue consumed in the manufacture

4. Hourly wages of refinery security guards

5. The salary of a financial vice president

6. Advertising costs

7. Straight-line depreciation on factory machinery

8. Wages of assembly-line personnel

9. Delivery costs incurred

10. Newsprint consumed in printing

11. Plant insurance costs

12. LED costs incurred in light-bulb manufacturing

Required: Evaluate each of the preceding and determine whether the cost is:

(a) a product cost or a period cost

(b) variable or fixed in terms of behavior

AND

(c) for the product costs only, whether the cost is properly classified as direct material, direct labor, or manufacturing overhead. Item 1 is done as an

example: 1. Tire costs: Product cost, variable, direct material

1. Tire costs incurred: Product cost, variable, and direct material.

2. Sales commissions paid to the sales force: Period, variable.

3. Wood glue consumed in the manufacture: Product cost, variable, and manufacturing overhead.

4. Hourly wages of refinery security guards: Product cost, fixed, and manufacturing overhead.

5. The salary of a financial vice president: Period cost, fixed.

6. Advertising costs: Period cost, fixed.

7. Straight-line depreciation on factory machinery: Product cost, fixed, and manufacturing overhead.

8. Wages of assembly-line personnel: Product cost, variable, and direct labor.

9. Delivery costs incurred: Period, variable.

10. Newsprint consumed in printing: Product cost, variable, and direct material.

11. Plant insurance costs: Product cost, fixed, and manufacturing overhead.

12. LED costs incurred in light-bulb manufacturing: Product cost, variable, and direct material.

Explanation:

In Accounting, Costing is the measurements of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production. The various type of costs are;

1. Product cost is the expenses incurred when a product is sold.

2. Period cost refers to the period in which costs are incurred.

3. Fixed cost refers to costs that remains constant over variations in production activity, irrespective of amount of goods.

3. Variable cost refers to cost which are the same per unit of production but vary directly with level of output.

4. Direct costs refer to the costs that are peculiar to a particular department or area while indirect cost can't be traced to any.

5. Manufacturing overhead are all indirect cost required in producing a good that isn't associated with direct materials or direct labor.