Exam 14-19

Direct costs

A cost traced to a cost object, like direct materials

Indirect costs

A cost not effectively or efficiently traced to a cost object like overhead

period costs

Costs expensed immediately to the Income statement, not part of the manufacturing process

Product costs

Costs that are first capitalized to the balance sheet, mostly inventory accounts like direct labor

Display screen

Direct materials

Assembly-line supervisor salary

Factory overhead

Salary of CEO

Direct labor

Factory electricity

Product cost: Factory overhead

Wages for retail store salesperson

Selling expense

Advertising

Period: Selling expense

OFfice supplies used

Period: general and administrative expense

Batteries for electric car

Product cost: direct materials

Depreciation on office equipment

Period cost: general and administrative

Leather for car seats

Product: direct materials

Uniforms provided for each factory worker

Factory overhead

Factory overhead

All costs not direct materials or direct labor but part of manufacturing

Direct Labor

Efforts of employees who physically convert materials to finished product

Indirect Labor

Workers not linked to specific units or product batches

Direct materials

Tangible components of finished product. Costs are separately and readily traced from Raw Materials to Finished Goods

Product

capitalized inventory cost; necessary and integral to finished products

Period

expensed; pertain more to time period than finished product; activities not part of manufacturing process

Wages for product assembly worker

Direct

Factory building rent

Indirect

Taxes on factory

Indirect

Ink for labeling soccer balls

Indirect - dont need to know exact measurement

Rubber blade interior for balls

Direct