Classification of costs

  Using the code letters below, indicate in the space provided how each of the following costs should be classified for a pen manufacturing company: 1.1. Property tax on the factory building = 1.2. The chief financial officer's salary = 1.3. Plastic used to manufacture pens = 1.4. Janitors at the factory = 1.5. Manufactured pens waiting to be sold to customers = 1.6. Advertising logos = 1.7. Partially completed pens = QUESTION 2 (10 Marks) Product cost vs. period cost Briefly define the terms product cost and period cost. Explain why the distinction between these two types of costs is important. QUESTION 3 (18 Marks) Indicate whether each of the following is a product cost or a period cost: 3.1. Electricity for lighting a factory building = 3.2. Costs of delivering finished bicycles to dealers = 3.4. Cost of a store detective in a retail establishment = 3.5. Cost of eggs in a bakery = 3.6. Cost of chocolate to a candy manufacturer = 3.7. Salary of injection molding machine operator in a plastics factory = 3.8. Salary of a sewing machine operator in a clothing factory = 3.9. Depreciation of a freezer in an ice cream plant = QUESTION 4 (20 Marks) 4. There are two distinct types of cost accounting systems: job order costing systems and process costing systems. How does management decide whether to use a job order costing system or a process costing system in any given manufacturing situation? Explain briefly. QUESTION 5 (15 Marks) 5.1. Define fixed costs and provide an example 5.2. Define variable costs and provide an example QUESTION 6 (15 Marks) Under- and over-applied overhead 6.1. What is meant by under-applied overhead? By over-applied overhead? Briefly explain each term. QUESTION 7 (8 Marks) Alice Blue is a wholesale dress manufacturer. In manufacturing dresses, the following costs were incurred in March: Projected overhead for the year was $560,000 to be allocated based on project direct labor cost of $395,000. What are the total manufacturing costs for March (round your answers)?