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25 July, 21:40

The Sharpe Company reports the following information for 2012: Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Compute: a) product costs b) period costs

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  1. 25 July, 22:56
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    Product Cost = $35,000

    Period Cost = $101,000

    Explanation:

    Given

    Sales $76,500

    Direct materials used 7,300 Depreciation on factory equipment 4,700

    Indirect labor 5,900

    Direct labor 10,500

    Factory rent 4,200

    Factory utilities 1,200

    Sales salaries expense 15,600

    Office salaries expense 8,900 Indirect materials 1,200

    Product cost refers to the costs incurred to create a product.

    From the given data; the product cost will be calculated by the summation of the following:

    Direct materials used 7,300 Depreciation on factory equipment 4,700

    Indirect labor 5,900

    Direct labor 10,500

    Factory rent 4,200

    Factory utilities 1,200

    Indirect materials 1,200

    So, Product Cost = 7,300 + 4,700 + 5,900 + 10,500 + 4,200 + 1,200 + 1,200

    Product Cost = $35,000

    Period Cost is any cost that cannot be capitalized into prepaid expenses, inventory, or fixed assets.

    From the given data; the period cost will be calculated by the summation of the following:

    Sales $76,500

    Sales salaries expense 15,600

    Office salaries expense 8,900

    Period Cost = $76,500 + $15,600 + $8,900

    Period Cost = $101,000
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