Q2TI_2 - Horngren'S Financial And Managerial Accounting

Question

Identify each cost as a period cost or a product cost. If it is a product cost, further indicate if the cost is direct materials, direct labor, or manufacturing overhead. Then determine if the product cost is a prime cost and/or a conversion cost. 

7. Wages of the office receptionist in an administrative office

Step-by-Step Solution

Answer

The wages of an office receptionist are a period cost.

Step 1: Definition of the product cost

The product cost is defined as the cost thatincludes all the costs of purchasing or making a product.

Step 2: Identification of costs

The wages of an office receptionist are considered as the period cost. As the wages given in the administrative office are a non-manufacturing cost. Rather it is an administrative cost.