Homework Clinic

Social Science Clinic => Accounting => Topic started by: sbegs on Feb 5, 2023

Title: Some companies believe that as long as the sales revenue a customer generates exceeds the cost of ...
Post by: sbegs on Feb 5, 2023

Some companies believe that as long as the sales revenue a customer generates exceeds the cost of goods sold, that the customer is profitable. However, companies incur product costs, selling costs, and administrative costs.

Required:

a.	List three items that are classified as product costs.

b.	List three items that are classified as selling costs.

c.	List three items that are classified as administrative costs.

Title: Some companies believe that as long as the sales revenue a customer generates exceeds the cost of ...
Post by: viper01 on Feb 5, 2023

Answers will vary. Some examples are:

a.	Direct material, direct labor, manufacturing overhead. An example of direct material

is wood for furniture. An example of direct labor is assembly line workers' salaries. An example of manufacturing overhead is depreciation on factory equipment.

b.	Examples of selling costs include storage of finished goods, delivery or shipping

charges, sales commissions, and depreciation on delivery truck.

c.	Examples of administrative costs include the president's salary, depreciation on office

equipment, salary of accounts payable clerks, insurance on home office, and janitorial supplies used in home office.