Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures

Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures sophisticated radar sets for commercial aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its tremendous growth. The bank requires financial statements before approving such a loan.

Required:

Classify each cost listed below as either a product cost or a period cost for purposes of preparing the financial statements for the bank.

	Costs	Product/Period
1.	The cost of the memory chips used in a radar set.	Product cost
2.	Factory heating costs.	Product cost
3.	Factory equipment maintenance costs.	Product cost
4.	Training costs for new administrative employees.	Period cost
5.	The cost of the solder that is used in assembling the radar sets.	Product cost
6.	The travel costs of the company’s salespersons.	Period cost
7.	Wages and salaries of factory security personnel.	Product cost
8.	The cost of air-conditioning executive offices.	Period cost
9.	Wages and salaries in the department that handles billing customers.	Period cost
10.	Depreciation on the equipment in the fitness room used by factory workers.	Product cost
11.	Telephone expenses incurred by factory management.	Product cost
12.	The costs of shipping completed radar sets to customers.	Period cost
13.	The wages of the workers who assemble the radar sets.	Product cost
14.	The president’s salary.	Period cost
15.	Health insurance premiums for factory personnel.	Product cost