Q2TI_6 - 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. 

11.Salary of the sales manager

Step-by-Step Solution

Answer

The salary of the sales manager is period cost.

Step 1: Definition of direct labor

Directlabor is defined as the cost incurred by the business to pay for the labor which is directly associated with the production process.

Step 2: Identification of costs

The salary of the sales manager will be considered period cost as it does not involve any purchase of goods or production of goods. It is an administrative expense incurred by the company.