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Company manufactured 100,000 units 2019 and reported the following costs: Indirect manufacturing labor 275
Company manufactured 100,000 units 2019 and reported the following costs: Indirect manufacturing labor 275.200 Rental costs-plant $384,000 Fire insurance-plant 116,000 Depreciation plant 224,000 Property taxes-plant 32.000 Administration costs 800,000 Direct materials, 1/1/X5 384,000 Sales revenue 2,800,000 Direct manufacturing labor 2.176.000 Direct material purchases 3,136.000 Finished goods, 12/31/X5 280,000 Sales commissions 640,000 Advertising costs 480.000 Sales salaries 576,000 What are the total period costs incurred in 20198 Select one: a. $ 1,856,000 ob.$ 280,000 c. $ 2,496,000 d. $ 920.000
Expert Solution
Period costs are such costs which are included and recorded as an expense in the year in which the such expenses are incurred. Period costs are not charged to the product costs. Period costs include all costs associated with sales, general and administrative aspects of the company.
As per the given information, period costs include, advertising costs, administration costs, sales commissions and sales salaries.
Period costs = Advertising costs + Administration costs + Sales commissions + Sales salaries = $480,000 + $800,000 + $640,000 + $576,000 = $2,496,000
All other given costs are product costs which forms part of the product cost. Product costs include all direct and indirect manufacturing costs.
Sales revenue is considered as operating income.
Therefore, total period costs incurred in 2019 is $2,496,000.
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