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3 April, 16:47

Sobota Corporation has provided the following partial listing of costs incurred during August:

Marketing salaries $ 51,900

Property taxes, factory $ 10,300

Administrative travel $ 105,000

Sales commissions $ 52,400

Indirect labor $ 44,100

Direct materials $ 172,600

Advertising $ 144,000

Depreciation of production equipment $ 48,300

Direct labor $ 94,500

Required:

a. What is the total amount of product cost listed above?

b. What is the total amount of period cost listed above?

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Answers (1)
  1. 3 April, 17:16
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    a. The total amount of product cost is $369,800

    b. The total amount of period cost is $353,300

    Explanation:

    Product costs are costs that are directly incurred in the production of goods. Products costs are traceable to production of goods. Examples of products costs are direct material cost and direct labor cost.

    In contrast, period costs are costs that are incurred on the general affairs of the business. They are not related to production of goods. They are incurred on administering a business. Example includes salaries paid to directors of a company

    Total amount of product cost $

    Property taxes, factory 10,300

    Indirect labor 44,100

    Direct materials 172,600

    Depreciation of production equipment 48,300

    Direct labor 94,500

    369,800

    Total amount of period cost: $

    Marketing salaries 51,900

    Administrative travel 105,000

    Sales commissions 52,400

    Advertising 144,000

    353,300
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