APA FORMAT
Option #1: Classification of Costs and Income Statement

Felix’s Fine Jewelry produces fine jewelry for department stores. The following costs incurred by the company may be classified as direct materials, direct labor, manufacturing overhead, or period costs.

a.

Wages paid to Jewelry workers

$ 1,200,000

b.

Utilities in the administrative area

300,000

c.

Depreciation on chain linking machinery utilized in the plant

200,000

d.

Silver, gold, and gemstones used in producing necklaces

4,000,000

e.

Company attorney’s salary

150,000

f.

Lease rental charge on forklift for material and finished goods handling

10,000

g.

Telephone expense for customer service office

20,000

h.

Wages of plant heating and cooling technicians

100,000

i.

Utilities for the assembly area of the plant

250,000

j.

Maintenance on computers utilized in the administrative assistant’s office

1,500

k.

Salary paid to the CEO

200,000

l.

Fine paid for introducing cyanide into the local water supply

1,000,000

m.

Signature red jewelry boxes used for packaging

50,000

n.

Expedited freight of product to major customer

50,000

Instructions:

Classify the costs and total by classification. Assume Felix’s Fine Jewelry’s revenue for the period was $8,000,000 and there is no change in ending inventory. Prepare an operating income statement that shows the deductions of expense in terms of total classification by category: direct materials, direct labor, manufacturing overhead, or period costs.

Provide your answers in clearly organized Excel spreadsheet. Refer to your text to aid you in this assignment.

Check spelling and formatting for readability. All responses must comply with APA.

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