Classify costs incurred by a dairy processing company
Each of the following costs pertains to Dairy Plains, a dairy processing company. Classify each of the company’s costs as a period cost or an inventoriable product cost. Further classify inventoriable product costs as direct material (DM), direct labor (DL), or manufacturing overhead (MOH).
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Cost |
Period Cost or Incentoriable Product Cost? |
DM, DL, or MOH? |
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1. |
Cost of milk purchased from local dairy farmers |
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2. |
Lubricants used in running bottling machines |
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3. |
Depreciation on refrigerated trucks used to collect raw milk from local dairy farmers |
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4. |
Property tax on dairy processing plant |
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5. |
Television advertisements for Dairy Plains’ products |
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6. |
Gasoline used to operate refrigerated trucks delivering finished dairy products to grocery stores |
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7. |
Company president’s annual bonus |
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8. |
Plastic gallon containers in which milk is packaged |
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9. |
Depreciation on marketing department’s computers |
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10. |
Wages and salaries paid to machine operators at dairy processing plant |
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11. |
Research and development on improving milk pasteurization process |