Final answer:
Factory Maintenance, Factory Electricity Costs, and Factory Rent are classified as Factory Overhead Costs. The Felt Covering and Cans for packaging are Direct Materials. Glue used in binding is generally considered a Factory Overhead due to its lower cost and tracing difficulty.
Step-by-step explanation:
In cost accounting, costs are categorized based on their relationship with the production process. The given costs associated with manufacturing tennis balls can be classified as follows:
Factory Maintenance, Factory Electricity Costs, and Factory Rent are classified under Factory Overhead Costs. These are indirect costs that cannot be directly traced to the production of a specific unit but are necessary for the production process to occur.
The Felt Covering of tennis balls and the Cans to package the balls are considered Direct Materials as they are directly traceable to the end product and are a significant component of the finished goods.
Glue used in binding rubber cores to felt covers is a bit more complex. While it is a material used in the production process, due to its insignificant cost or difficulty in tracing, it is often classified as Factory Overhead.
The classification of these costs helps companies in measuring their cost of goods sold (COGS) and in managing their budget and pricing strategies more effectively.