Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr}
\text { Rent on manufacturing facility} &\$250,000\
\text {office manager's salary } &150,000\
\text { Wages of factory machine operators} &110,000\
\text {Depreciation on manufacturing equipment } &50,000\
\text {Insurance and taxes on selling and administrative } &30,000\
\text { offices } &\
\text { Direct materials murchased and used } &170,000
\end{array}$
Wages paid to factory machine operators in producing the dog houses should be categorized as:

Question

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr}
  \text {  Rent on manufacturing facility} &\$250,000\
 \text {office manager's salary  } &150,000\
 \text {  Wages of factory machine operators} &110,000\
 \text {Depreciation on manufacturing equipment  } &50,000\
 \text {Insurance and taxes on selling and administrative  } &30,000\
 \text { offices } &\
 \text { Direct materials murchased and used } &170,000
\end{array}$
 Wages paid to factory machine operators in producing the dog houses should be categorized as:

Quizplus · Accepted Answer

Wages paid to factory machine operators in producing the dog houses should be categorized as a product cost and recorded in the inventory account, as they are directly related to the production of the dog houses and will be included in the cost of goods sold when the dog houses are sold. Period costs, on the other hand, are expensed immediately and charged to the income statement in the period in which they are incurred.

Steuben Company Produces Dog Houses Wages Paid to Factory Machine Operators in Producing the Dog