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Instructions: Classify the following manufacturing costs and expenses incurred by Garcia
Manufacturing Co., making soda drinks, by using the following code letters:
A. Direct material Cost
B. Direct labor cost
C. Manufacturing overhead cost
D. Period Cost
1.
Sale
A. Direct material Cost B. Direct labor cost C. Manufacturing overhead cost D. Period Cost
Solution
Cost Code Reason 1 D Sales commision to employees is not related with Product directly. 2 C
Dep. on Factory Equipment in Manufacturing O/H because related with Factory 3 D Promotional
Cost are Period Costs. 4 A All this are material used in production so Direct Material Cost. 5 C
Rent on Machinery is a Manufacturing O/H because related with Factory 6 D Not directly related
with any product so it is a Period Cost. 7 C Manufacturing O/H Cost because related with
Factory 8 C Indirect Material included in O/H 9 C Indirect Labor Cost included in O/H 10 B
Directly related with production so Direct Labor Cost.
Instructions- Classify the following manufacturing costs and expenses.docx

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Instructions- Classify the following manufacturing costs and expenses.docx

  • 1. Instructions: Classify the following manufacturing costs and expenses incurred by Garcia Manufacturing Co., making soda drinks, by using the following code letters: A. Direct material Cost B. Direct labor cost C. Manufacturing overhead cost D. Period Cost 1. Sale A. Direct material Cost B. Direct labor cost C. Manufacturing overhead cost D. Period Cost Solution Cost Code Reason 1 D Sales commision to employees is not related with Product directly. 2 C Dep. on Factory Equipment in Manufacturing O/H because related with Factory 3 D Promotional Cost are Period Costs. 4 A All this are material used in production so Direct Material Cost. 5 C Rent on Machinery is a Manufacturing O/H because related with Factory 6 D Not directly related with any product so it is a Period Cost. 7 C Manufacturing O/H Cost because related with Factory 8 C Indirect Material included in O/H 9 C Indirect Labor Cost included in O/H 10 B Directly related with production so Direct Labor Cost.