Q2TI_5 - 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. 

10.Salary of the factory maintenance supervisor

Step-by-Step Solution

Answer

It is a product cost, manufacturing overhead, and conversion cost.

Step 1: Definition of manufacturing overhead

The manufacturing overhead is defined as the cost incurred by the business which includes all the indirect costs.

Step 2: Identification of costs

The salary of the factory maintenance supervisor is the product cost as it involves the production of goods.

It is a manufacturing overhead cost as it is an indirect cost.

It is the conversion cost.