1. Classify each of the following costs for Hamilton Company as a period cost or as a direct or indirect product cost by entering the dollar amount(s) in the appropriate column(s). Also classify if the cost is a Variable Cost or a Fixed Cost: A. Recognized $85,000 in wages for employees who assemble the company's products. B. Recognized sales commissions of $68,000. C. Recognized $48,000 in salaries for factory supervisors. D. Recognized $98,000 in salaries for executives (president and vice presidents). E. Recorded depreciation cost of $35,000. $18,000 was depreciation on factory equipment and $17,000 was depreciation on administrative office equipment F. Advertising expenses for print ads were $15,000 for the year. This cost lead directly to product sales for Hamilton Company. G. Utilized $15,000 of Raw Materials, $10,000 of direct and $5,000 of Indirect

Hamilton Company

Cost Classification:

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

A. Recognized $85,000 in wages for employees who assemble the company's products.                   $85,000                  $85,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

B. Recognized sales commissions

 of $68,000                 $68,000                                 $68,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

C. Recognized $48,000 in salaries for

 factory supervisors.                                   $48,000                 $48,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

D. Recognized $98,000 in salaries for executives (president and vice presidents).                 $98,000                                                 $98,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

E. Recorded depreciation cost of $35,000. $18,000 was depreciation on factory equipment and $17,000 was depreciation on administrative office equipment                   $17,000                    $18,000                  $35,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

F. Advertising expenses for print ads were $15,000 for the year. This cost lead directly to product sales for Hamilton Company.

                                     $15,000                                                    $15,000

                                       Period     Direct     Indirect    Variable    Fixed

                                        Cost        Cost        Cost          Cost       Cost

G. Utilized $15,000 of Raw Materials, $10,000 of direct and $5,000 of Indirect

                                                     $10,000   $5,000    $15,000

Explanation:

a) Period costs: These costs relate to an accounting period or passage of time.  For example, advertising expense is a period cost.  Some period costs are fixed.

b) Direct costs: These costs are traceable to the cost object.  They are attributable to the production of goods or services.  They form the elements for the costs of the product.

c) Indirect costs are not directly attributable to the product costs.  For example, the cost of indirect materials or labor are not directly related to the product.

d) Costs can be classified into variable and fixed.  These depict the behaviors of the cost.  Variable costs change with the volume of production, while fixed costs remain constant irrespective of the level of activity, especially in the short-run, because all costs vary in the long-run.