1.
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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

2.
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

3.
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.