Campus Carriers Co manufactures and sells backpacks to college students. The company operates a factory in Small Town and two stores in College Town and University City. Classify the following costs incurred by Campus Carriers as Direct Materials, Direct Labor, Factory Overhead or Selling and Administrative Expense
a. Rent paid to lease the store in College Town.
b. Canvas fabric.
c. Wages paid to students distributing advertising fliers in University City.
d. Sewing machine operator's wages.
e. Building depreciation on the factory building.
f. Thread.
g. The cost of transporting the backpacks from the factory in Small Town to the University City store.
h. Depreciation of the cash register at the College Town Store.
i. Factory manager's salary.
j. Security guard at the factory.
k. Store manager's salary.
l. Electricity to power sewing machines.
m. Electricity to light the College Town store.
a. Selling and administrative expense would include costs related to stores.
b. Direct material - canvas would be used to make back packs.
c. Selling and administrative expense would include advertising.
d. Direct labor - sewing machine operators are "touch" labor.
e. Factory overhead - depreciation is a factory expense that cannot be traced directly to the products.
f. Factory overhead. While thread is included in the final product, the cost is insignificant and would be accounted for as an indirect cost.
g. Selling and administrative expense. Transportation is incurred outside of the factory.
h. Selling and administrative expense would include costs relating to the stores.
i. Factory overhead - the factory manager's salary is a factory cost that cannot be traced directly to products.
j. Factory overhead - the security guard's salary is a factory cost that cannot be traced directly to products.
k. Selling and administrative expense would include all costs related to the stores.
l. Factory overhead - electricity to run the machines is a factory cost that cannot be traced directly to products..
m. Selling and administrative expense would include all costs related to the stores.
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