Question

EA1.

LO 4.1Little Things manufactures toys. For each item listed, identify whether it is a product cost, a period cost, or not an expense.

internet provider services
material expense
raw materials inventory
production equipment rental
showroom rental
factory employee salary
Human Resource Director salary

Answer 1

There is a various cost that involves product cost and the period cost. The product cost is the cost required to produce the product. It involves direct material, direct labor, and the manufacturing overhead cost

And, the period cost is that cost which is fixed in nature like - sales commissions, service cost, manager salary, etc

So, the categorization is shown below:

Internet provider services

- period cost

Material expense

- expense cost

Raw materials inventory

- not an expense as it is a come in the current asset

Production equipment rental

- product cost

Showroom rental

- period cost

Factory employee salary

- product cost

Human Resource Director salary

- period cost