Direct materials $ 74,000 Direct labor $ 37,500 Variable manufacturing overhead $ 17,000 Fixed manufacturing overhead 29,500 Total manufacturing overhead $ 46,500 Variable selling expense $ 13,000 Fixed selling expense 20,000 Total selling expense $ 33,000 Variable administrative expense $ 4,500 Fixed administrative expense 26,000 Total administrative expense $ 30,500 Required: 1. With respect to cost classifications for preparing financial statements: a. What is the total product cost? b. What is the total period cost?

Instructions are listed below

Explanation:

Giving the following information:

Direct materials $ 74,000

Direct labor $ 37,500

Variable manufacturing overhead $ 17,000

Fixed manufacturing overhead 29,500

Total manufacturing overhead $ 46,500

Variable selling expense $ 13,000

Fixed selling expense 20,000

Total selling expense $ 33,000

Variable administrative expense $ 4,500

Fixed administrative expense 26,000

Total administrative expense $ 30,500

- Period costs are not directly tied to the production process. Overhead or sales, general, and administrative (SG&A) costs are considered period costs. SG&A includes costs of the corporate office, selling, marketing, and the overall administration of company business.

- Product costs are the direct costs involved in producing a product. A manufacturer, for example, would have production costs that include: Direct labor, Raw materials, Manufacturing supplies, Overhead that's directly tied to the production facility such as electricity.

Period costs = total selling expense + total administrative expense

Period costs = 33000 + 30500 = $63,500

Product costs = direct materials + direct labor + MOH

Product costs = 74,000 + 37,500 + 46,500 = $158,000