AC505 Chap 2 Hmwk Solutions - Chapter2...

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Chapter 2 Cost Terms, Concepts, and Classifications Exercise 2-2  (10 minutes) 1. The cost of a hard drive installed in a computer: direct materials. 2. The cost of advertising in the  Puget Sound Computer User  newspaper: selling. 3. The wages of employees who assemble computers from  components: direct labor. 4. Sales commissions paid to the company’s salespeople: selling. 5. The wages of the assembly shop’s supervisor: manufacturing  overhead. 6. The wages of the company’s accountant: administrative. 7. Depreciation on equipment used to test assembled computers  before release to customers: manufacturing overhead. 8. Rent on the facility in the industrial park: a combination of  manufacturing overhead, selling, and administrative. The rent  would most likely be prorated on the basis of the amount of space  occupied by manufacturing, selling, and administrative operations.
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Exercise 2-3  (15 minutes) Product  Cost Period  Cost 1. Depreciation on salespersons’ cars. ......................... X 2. Rent on equipment used in the factory. .................... X 3. Lubricants used for machine maintenance. .............. X 4. Salaries of personnel who work in the finished  goods warehouse. ................................................. X 5. Soap and paper towels used by factory workers at  the end of a shift. ................................................... X 6. Factory supervisors’ salaries. ................................... X 7. Heat, water, and power consumed in the factory. .... X 8. Materials used for boxing products for shipment  overseas (units are not normally boxed). ............... X
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AC505 Chap 2 Hmwk Solutions - Chapter2...

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