Identifying Product and Period Costs

Topics: Inventory, Balance sheet, Income statement Pages: 2 (257 words) Published: May 1, 2012

Problems 3-22, identifying product and period costs

a. Transportation-in- product costs b. Insurance on the office building- period costs c. Office supplies- period costs d. Costs incurred to improve the quality of goods available for sale. Product costs e. Good purchased for resale- product costs f. Salaries of salespersons- period costs g. Advertising costs- Period costs h. Transportation-out- product costs i. Rent expense product costs j. Salary of the company president- period costs

Problem 3-25 Comprehensive cycle problem: perpetual system

A. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). 1. AE
2. CE
3. AS

Problems 4-20 Effect of different inventory cost flow methods on financial statements 1. First purchase (cash) 100 units @ $92
2. Second purchase (cash) 175 units @ $100
3. Sales (all cash) 300 units @ $170
4. Paid $15,000 cash for operating expenses.
5. Paid cash for income tax at the rate of 30 percent of income before taxes.


A. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow.

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