Steuben Company produces dog houses. During 2013, Steuben Company incurred the following costs: $\begin{array}{lr}
\text { Rent on manufacturing facility } & \$ 250,000 \
\text { Office manager's salary } & 150,000 \
\text { Wages of factory machine operators } & 110,000 \
\text { Depreciation on manufacturing equipment } & 50,000 \
\text { Insurance and taxes on selling and administrative offices } & 30,000 \
\text { Direct materials purchased and used } & 170,000
\end{array}$ Wages paid to factory machine operators in producing the dog houses should be categorized as:

Question

Steuben Company produces dog houses. During 2013, Steuben Company incurred the following costs: $\begin{array}{lr}
\text { Rent on manufacturing facility } & \$ 250,000 \
 \text { Office manager's salary } & 150,000 \
 \text { Wages of factory machine operators } & 110,000 \
\text { Depreciation on manufacturing equipment } & 50,000 \
\text { Insurance and taxes on selling and administrative offices } & 30,000 \
 \text { Direct materials purchased and used } & 170,000
\end{array}$ 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 are a product cost because they are directly related to the production of the dog houses. Product costs are recorded in the inventory account until the dog houses are sold.

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