Your Computer, Inc. assembles custom computers from components supplied by various manufacturers. The company is very small, and its assembly shop and retail sales store are housed in a single facility in North Vancouver. Following are some of the costs that are incurred at the company.
Required:
For each cost, indicate whether it would most likely be classified as direct labour, direct materials, manufacturing overhead, marketing and selling, or administrative cost. List all classifications that apply to a specific cost item.
1. Monthly salary of the company’s accountant.
2. Cost of a fan installed in a computer.
3. Rental on equipment used to assemble computers.
4. Cost of advertising in the local community newspaper.
5. Monthly charge paid to an outside company for quality testing (20% of the computers assembled are sent for testing).
6. Wages of employees who assemble computers from components.
7. Salary of the assembly shop’s supervisor.
8. Sales commissions paid to the company’s salespeople.
9. Rent on the facility.