Question

Ikerd Company is a manufacturer of personal computers. Various costs and expenses associated with its operations are as follows. The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor, (c) manufacturing overhead, and (d) period costs. For each item, indicate the cost category to which it belongs. Item Category 1. Property taxes on the factory building. 2. Production superintendents’ salaries. 3. Memory boards and chips used in assembling computers. 4. Depreciation on the factory equipment. 5. Salaries for assembly-line quality control inspectors. 6. Sales commissions paid to sell personal computers. 7. Electrical components used in assembling computers. 8. Wages of workers assembling personal computers. 9. Soldering materials used on factory assembly lines. 10. Salaries for the night security guards for the factory building.

Answer 1

Instructions are listed below

Step-by-step explanation:

- Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product.

- Direct labor is production or services labor that is assigned to a specific product, cost center, or work order.

- Manufacturing overhead refers to indirect factory-related costs that are incurred when a product is manufactured.

- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.

Giving the following information, we need to classify these costs on direct materials(DM), direct labor(DL), manufacturing overhead (MOH), period costs (PC).

1. Property taxes on the factory building. MOH

2. Production superintendents’ salaries. MOH

3. Memory boards and chips used in assembling computers. DM

4. Depreciation on the factory equipment. MOH

5. Salaries for assembly-line quality control inspectors. DL

6. Sales commissions paid to sell personal computers. PC

7. Electrical components used in assembling computers. DM

8. Wages of workers assembling personal computers. DL

9. Soldering materials used on factory assembly lines. MOH

10. Salaries for the night security guards for the factory building. PC