may be suppressed from the eBook and/or eChapter(s).

Editorial review has

deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Discussion Questions
1. What are the major differences between managerial
accounting and financial accounting?
2. a. Differentiate between a department with line
responsibility and a department with staff responsibility.
b. In an organization that has a Sales Department
and a Personnel Department, among others,
which of the two departments has (1) line responsibility
and (2) staff responsibility?
3. What manufacturing cost term is used to describe
the cost of materials that are an integral part of the
manufactured end product?
4. Distinguish between prime costs and conversion
costs.
5. What is the difference between a product cost and
a period cost?
6. Name the three inventory accounts for a manufacturing
business, and describe what each balance
represents at the end of an accounting period.
7. In what order should the three inventories of a
manufacturing business be presented on the balance
sheet?
8. What are the three categories of manufacturing costs
included in the cost of finished goods and the cost
of work in process?
9. For a manufacturer, what is the description of the
account that is comparable to a merchandising business’s
cost of merchandise sold?
10. How does the Cost of Goods Sold section of the income
statement differ between merchandising and
manufacturing companies?

Practice Exercises
Management process OBJ. 1
Three phases of the management process are controlling, planning, and decision making.
Match the following descriptions to the proper phase.
Phase of management process Description
Controlling a. Monitoring the operating results of implemented plans and
comparing the actual results with expected results.
Planning b. Inherent in planning, directing, controlling, and improving.
Decision making c. Long-range courses of action.
Management process OBJ. 1
Three phases of the management process are planning, directing, and controlling. Match
the following descriptions to the proper phase.
Phase of management process Description
Planning a. Developing long-range courses of action to achieve goals.
Directing b. Isolating significant departures from plans for further investigation
and possible remedial action. It may lead to a revision of future
plans.
Controlling c. Process by which managers, given their assigned levels of
responsibilities, run day-to-day operations.
Example
Exercises
Chapter 16 Managerial Accounting Concepts and Principles 773
EE 16-1 p. 758
EE 16-1 p. 758
PE 16-1A
PE 16-1B
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Direct materials, direct labor, and factory overhead OBJ. 2

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for an automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant supervisor
c. Steel
d. Oil used for assembly line machinery
Direct materials, direct labor, and factory overhead OBJ. 2
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for a magazine publisher.
a. Staples used to bind magazines
b. Wages of printing machine employees
c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine
d. Maintenance on printing machines
Product and period costs OBJ. 2
Identify the following costs as a product cost or a period cost for an automobile
manufacturer.
a. Steel
b. Wages of employees that operate painting equipment
c. Rent on office building
d. Sales staff salaries
Product and period costs OBJ. 2
Identify the following costs as a product cost or a period cost for a magazine publisher.
a. Sales salaries
b. Paper used for the magazine
c. Maintenance on printing machines
d. Depreciation expense—corporate headquarters
Example
Exercises
774 Chapter 16 Managerial Accounting Concepts and Principles
EE 16-2 p. 761
EE 16-2 p. 761
EE 16-3 p. 762
EE 16-3 p. 762
EE 16-4 p. 764
EE 16-4 p. 764
PE 16-2A
PE 16-2B
PE 16-3A
PE 16-3B
PE 16-4A
PE 16-4B
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Cost of goods sold, cost of goods manufactured OBJ. 3
Hill Company has the following information for January:
Cost of direct materials used in production $16,800
Direct labor 43,400
Factory overhead 28,000
Work in process inventory, January 1 70,000
Work in process inventory, January 31 74,200
Finished goods inventory, January 1 29,400
Finished goods inventory, January 31 33,600
For January, determine (a) the cost of goods manufactured and (b) the cost of goods sold.
Cost of goods sold, cost of goods manufactured OBJ. 3
Ebony Company has the following information for July:
Cost of direct materials used in production $67,200
Direct labor 88,000
Factory overhead 44,800
Work in process inventory, July 1 32,800
Work in process inventory, July 31 29,600
Finished goods inventory, July 1 37,600
Finished goods inventory, July 31 27,200
For July, determine (a) the cost of goods manufactured and (b) the cost of goods sold.
Exercises
Classifying costs as materials, labor, or factory overhead OBJ. 2
Indicate whether each of the following costs of an automobile manufacturer would be
classified as direct materials cost, direct labor cost, or factory overhead cost:
a. Steering wheel
b. Salary of test driver
c. Depreciation of welding equipment
d. V8 automobile engine
e. Wages of assembly line worker
f. Steel used in body
g. Tires
h. Assembly machinery lubricants
Classifying costs as materials, labor, or factory overhead OBJ. 2
Indicate whether the following costs of Colgate-Palmolive Company, a maker of consumer
products, would be classified as direct materials cost, direct labor cost, or factory overhead
cost:
a. Maintenance supplies
b. Wages of production line employees
c. Depreciation on production machinery
d. Resins for soap and shampoo products
e. Plant manager salary for the Clarksville, Indiana, soap plant
f. Packaging materials
(Continued)
Example
Exercises
Chapter 16 Managerial Accounting Concepts and Principles 775
EE 16-5 p. 768
EE 16-5 p. 768
PE 16-5A
PE 16-5B
EX 16-1
EX 16-2
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
g. Depreciation on the Morristown, Tennessee, toothpaste plant
h. Wages paid to Packaging Department employees
i. Scents and fragrances
j. Salary of process engineers
Classifying costs as factory overhead OBJ. 2
Which of the following items are properly classified as part of factory overhead for
Caterpillar, a maker of heavy machinery and equipment?
a. Factory supplies used in the Danville, Kentucky, tractor tread plant
b. Interest expense on debt
c. Amortization of patents on new assembly process
d. Steel plate
e. Plant manager’s salary at Aurora, Illinois, manufacturing plant
f. Vice president of finance’s salary
g. Property taxes on the Aurora, Illinois, manufacturing plant
h. Consultant fees for a study of production line employee productivity
i. Sales incentive fees to dealers
j. Depreciation on Peoria, Illinois, headquarters building
Classifying costs as product or period costs OBJ. 2
For apparel manufacturer Ann Taylor, Inc., classify each of the following costs as either a
product cost or a period cost:
a. Depreciation on office equipment
b. Property taxes on factory building and equipment
c. Advertising expenses
d. Sales commissions
e. Salaries of distribution center personnel
f. Factory supervisors’ salaries
g. Factory janitorial supplies
h. Repairs and maintenance costs for sewing machines
i. Research and development costs
j. Travel costs of media relations employees
k. Chief financial officer’s salary
l. Oil used to lubricate sewing machines
m. Depreciation on sewing machines
n. Utility costs for office building
o. Salary of production quality control supervisor
p. Fabric used during production
q. Wages of sewing machine operators
Concepts and terminology OBJ. 1, 2
From the choices presented in parentheses, choose the appropriate term for completing
each of the following sentences:
a. Feedback is often used to (improve, direct) operations.
b. The implementation of automatic, robotic factory equipment normally (increases,
decreases) the direct labor component of product costs.
c. Advertising costs are usually viewed as (period, product) costs.
d. The balance sheet of a manufacturer would include an account for (cost of goods sold,
work in process inventory).
e. Factory overhead costs
may be suppressed from the eBook and/or eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Discussion Questions
1. What are the major differences between managerial
accounting and financial accounting?
2. a. Differentiate between a department with line
responsibility and a department with staff responsibility.
b. In an organization that has a Sales Department
and a Personnel Department, among others,
which of the two departments has (1) line responsibility
and (2) staff responsibility?
3. What manufacturing cost term is used to describe
the cost of materials that are an integral part of the
manufactured end product?
4. Distinguish between prime costs and conversion
costs.
5. What is the difference between a product cost and
a period cost?
6. Name the three inventory accounts for a manufacturing
business, and describe what each balance
represents at the end of an accounting period.
7. In what order should the three inventories of a
manufacturing business be presented on the balance
sheet?
8. What are the three categories of manufacturing costs
included in the cost of finished goods and the cost
of work in process?
9. For a manufacturer, what is the description of the
account that is comparable to a merchandising business’s
cost of merchandise sold?
10. How does the Cost of Goods Sold section of the income
statement differ between merchandising and
manufacturing companies?

Practice Exercises
Management process OBJ. 1
Three phases of the management process are controlling, planning, and decision making.
Match the following descriptions to the proper phase.
Phase of management process Description
Controlling a. Monitoring the operating results of implemented plans and
comparing the actual results with expected results.
Planning b. Inherent in planning, directing, controlling, and improving.
Decision making c. Long-range courses of action.
Management process OBJ. 1
Three phases of the management process are planning, directing, and controlling. Match
the following descriptions to the proper phase.
Phase of management process Description
Planning a. Developing long-range courses of action to achieve goals.
Directing b. Isolating significant departures from plans for further investigation
and possible remedial action. It may lead to a revision of future
plans.
Controlling c. Process by which managers, given their assigned levels of
responsibilities, run day-to-day operations.
Example
Exercises
Chapter 16 Managerial Accounting Concepts and Principles 773
EE 16-1 p. 758
EE 16-1 p. 758
PE 16-1A
PE 16-1B
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Direct materials, direct labor, and factory overhead OBJ. 2

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for an automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant supervisor
c. Steel
d. Oil used for assembly line machinery
Direct materials, direct labor, and factory overhead OBJ. 2
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for a magazine publisher.
a. Staples used to bind magazines
b. Wages of printing machine employees
c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine
d. Maintenance on printing machines
Product and period costs OBJ. 2
Identify the following costs as a product cost or a period cost for an automobile
manufacturer.
a. Steel
b. Wages of employees that operate painting equipment
c. Rent on office building
d. Sales staff salaries
Product and period costs OBJ. 2
Identify the following costs as a product cost or a period cost for a magazine publisher.
a. Sales salaries
b. Paper used for the magazine
c. Maintenance on printing machines
d. Depreciation expense—corporate headquarters
Example
Exercises
774 Chapter 16 Managerial Accounting Concepts and Principles
EE 16-2 p. 761
EE 16-2 p. 761
EE 16-3 p. 762
EE 16-3 p. 762
EE 16-4 p. 764
EE 16-4 p. 764
PE 16-2A
PE 16-2B
PE 16-3A
PE 16-3B
PE 16-4A
PE 16-4B
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Cost of goods sold, cost of goods manufactured OBJ. 3
Hill Company has the following information for January:
Cost of direct materials used in production $16,800
Direct labor 43,400
Factory overhead 28,000
Work in process inventory, January 1 70,000
Work in process inventory, January 31 74,200
Finished goods inventory, January 1 29,400
Finished goods inventory, January 31 33,600
For January, determine (a) the cost of goods manufactured and (b) the cost of goods sold.
Cost of goods sold, cost of goods manufactured OBJ. 3
Ebony Company has the following information for July:
Cost of direct materials used in production $67,200
Direct labor 88,000
Factory overhead 44,800
Work in process inventory, July 1 32,800
Work in process inventory, July 31 29,600
Finished goods inventory, July 1 37,600
Finished goods inventory, July 31 27,200
For July, determine (a) the cost of goods manufactured and (b) the cost of goods sold.
Exercises
Classifying costs as materials, labor, or factory overhead OBJ. 2
Indicate whether each of the following costs of an automobile manufacturer would be
classified as direct materials cost, direct labor cost, or factory overhead cost:
a. Steering wheel
b. Salary of test driver
c. Depreciation of welding equipment
d. V8 automobile engine
e. Wages of assembly line worker
f. Steel used in body
g. Tires
h. Assembly machinery lubricants
Classifying costs as materials, labor, or factory overhead OBJ. 2
Indicate whether the following costs of Colgate-Palmolive Company, a maker of consumer
products, would be classified as direct materials cost, direct labor cost, or factory overhead
cost:
a. Maintenance supplies
b. Wages of production line employees
c. Depreciation on production machinery
d. Resins for soap and shampoo products
e. Plant manager salary for the Clarksville, Indiana, soap plant
f. Packaging materials
(Continued)
Example
Exercises
Chapter 16 Managerial Accounting Concepts and Principles 775
EE 16-5 p. 768
EE 16-5 p. 768
PE 16-5A
PE 16-5B
EX 16-1
EX 16-2
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
g. Depreciation on the Morristown, Tennessee, toothpaste plant
h. Wages paid to Packaging Department employees
i. Scents and fragrances
j. Salary of process engineers
Classifying costs as factory overhead OBJ. 2
Which of the following items are properly classified as part of factory overhead for
Caterpillar, a maker of heavy machinery and equipment?
a. Factory supplies used in the Danville, Kentucky, tractor tread plant
b. Interest expense on debt
c. Amortization of patents on new assembly process
d. Steel plate
e. Plant manager’s salary at Aurora, Illinois, manufacturing plant
f. Vice president of finance’s salary
g. Property taxes on the Aurora, Illinois, manufacturing plant
h. Consultant fees for a study of production line employee productivity
i. Sales incentive fees to dealers
j. Depreciation on Peoria, Illinois, headquarters building
Classifying costs as product or period costs OBJ. 2
For apparel manufacturer Ann Taylor, Inc., classify each of the following costs as either a
product cost or a period cost:
a. Depreciation on office equipment
b. Property taxes on factory building and equipment
c. Advertising expenses
d. Sales commissions
e. Salaries of distribution center personnel
f. Factory supervisors’ salaries
g. Factory janitorial supplies
h. Repairs and maintenance costs for sewing machines
i. Research and development costs
j. Travel costs of media relations employees
k. Chief financial officer’s salary
l. Oil used to lubricate sewing machines
m. Depreciation on sewing machines
n. Utility costs for office building
o. Salary of production quality control supervisor
p. Fabric used during production
q. Wages of sewing machine operators
Concepts and terminology OBJ. 1, 2
From the choices presented in parentheses, choose the appropriate term for completing
each of the following sentences:
a. Feedback is often used to (improve, direct) operations.
b. The implementation of automatic, robotic factory equipment normally (increases,
decreases) the direct labor component of product costs.
c. Advertising costs are usually viewed as (period, product) costs.
d. The balance sheet of a manufacturer would include an account for (cost of goods sold,
work in process inventory).
e. Factory overhead costsmay be suppressed from the eBook and/or eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Discussion Questions
1. What are the major differences between managerial
accounting and financial accounting?
2. a. Differentiate between a department with line
responsibility and a department with staff responsibility.
b. In an organization that has a Sales Department
and a Personnel Department, among others,
which of the two departments has (1) line responsibility
and (2) staff responsibility?
3. What manufacturing cost term is used to describe
the cost of materials that are an integral part of the
manufactured end product?
4. Distinguish between prime costs and conversion
costs.
5. What is the difference between a product cost and
a period cost?
6. Name the three inventory accounts for a manufacturing
business, and describe what each balance
represents at the end of an accounting period.
7. In what order should the three inventories of a
manufacturing business be presented on the balance
sheet?
8. What are the three categories of manufacturing costs
included in the cost of finished goods and the cost
of work in process?
9. For a manufacturer, what is the description of the
account that is comparable to a merchandising business’s
cost of merchandise sold?
10. How does the Cost of Goods Sold section of the income
statement differ between merchandising and
manufacturing companies?

Practice Exercises
Management process OBJ. 1
Three phases of the management process are controlling, planning, and decision making.
Match the following descriptions to the proper phase.
Phase of management process Description
Controlling a. Monitoring the operating results of implemented plans and
comparing the actual results with expected results.
Planning b. Inherent in planning, directing, controlling, and improving.
Decision making c. Long-range courses of action.
Management process OBJ. 1
Three phases of the management process are planning, directing, and controlling. Match
the following descriptions to the proper phase.
Phase of management process Description
Planning a. Developing long-range courses of action to achieve goals.
Directing b. Isolating significant departures from plans for further investigation
and possible remedial action. It may lead to a revision of future
plans.
Controlling c. Process by which managers, given their assigned levels of
responsibilities, run day-to-day operations.
Example
Exercises
Chapter 16 Managerial Accounting Concepts and Principles 773
EE 16-1 p. 758
EE 16-1 p. 758
PE 16-1A
PE 16-1B
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Direct materials, direct labor, and factory overhead OBJ. 2

Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for an automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant supervisor
c. Steel
d. Oil used for assembly line machinery
Direct materials, direct labor, and factory overhead OBJ. 2
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead
(FO) for a magazine publisher.
a. Staples used to bind magazines
b. Wages of printing machine employees
c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or
eChapter(s). Editorial review has
deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
g. Depreciation on the Morristown, Tennessee, toothpaste plant
h. Wages paid to Packaging Department employees
i. Scents and fragrances
j. Salary of process engineers
Classifying costs as factory overhead OBJ. 2
Which of the following items are properly classified as part of factory overhead for
Caterpillar, a maker of heavy machinery and equipment?
a. Factory supplies used in the Danville, Kentucky, tractor tread plant
b. Interest expense on debt
c. Amortization of patents on new assembly process
d. Steel plate
e. Plant manager’s salary at Aurora, Illinois, manufacturing plant
f. Vice president of finance’s salary
g. Property taxes on the Aurora, Illinois, manufacturing plant
h. Consultant fees for a study of production line employee productivity
i. Sales incentive fees to dealers
j. Depreciation on Peoria, Illinois, headquarters building
Classifying costs as product or period costs OBJ. 2
For apparel manufacturer Ann Taylor, Inc., classify each of the following costs as either a

b. Wages of printing machine employees

c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine

b. Wages of printing machine employees

c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine
b. Wages of printing machine employees
c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine

b. Wages of printing machine employees

c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine

b. Wages of printing machine employees

c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine

b. Wages of printing machine employees

c. Maintenance on printing machines
d. Paper used in the magazine
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an
automobile manufacturer.
a. Wages of employees that operate painting equipment
b. Wages of the plant manager
c. Steel
d. Oil used for assembly line machinery
Prime and conversion costs OBJ. 2
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for a
magazine publisher.
a. Paper used for the magazine
b. Wages of printing machine employees
c. Glue used to bind magazine