Question

Indicate for each of the following costs whether it is a product cost or a period cost.

1. Wages of aircraft mechanics employed by an airline.
2. Wages of drill-press operators in a manufacturing plant.
3. Cost of food in a microwavable dinner.
4. Cost incurred by a department store chain to transport merchandise to its stores.
5. Cost of grapes purchased by a winery.
6. Depreciation on pizza ovens in a pizza restaurant.
7. Cost of plant manager in a computer production facility.
8. Wages of security personnel in a department store.
9. Cost of utilities in a manufacturing facility.

Answer 1

Answer and Explanation:

The classification of the following cost i.e. either product cost or period cost is

1. Period cost as it deals with the operating expense

2 Product cost as it directly linked with the product

3 Product cost as it directly linked with the product

4 Product cost as it directly linked with the product

5 Product cost as it directly linked with the product

6 Product cost as it directly linked with the product

7 Product cost as it directly linked with the product

8 period cost as it does not directly linked with the product

9 Product cost as it directly linked with the product