All School Logos & More (ASLM) design and manufacture school uniform crests. After production, the crests are placed into individual plastic cases, before being transferred into Finished Goods. The accounting records of the business for the quarter to December 31, 2021, for the manufacturing of uniform crests for Hill Point High School are given below. Inventory 1/10/2021 31/12/2021 Raw Materials $72,000 $65,000 Work in Progress $138,875 $129,125 Finished Goods $149,500 $141,700 Other information: Sales Revenue $1,694,950 Factory Labour 239,700 Raw Materials Purchased 235,000 Office Cleaner’s Wages 4,500 Factory Supplies Used 23,500 Depreciation: Factory Plant & Equipment 32,000 Total Utilities 1 118,750 Plant Supervisor’s Salary 180,000 Design Costs (School Logo) 4,300 Packaging Material Cost 35,000 Total Insurance 2 60,000 Delivery Vehicle Drivers’ Wages 41,250 Depreciation: Delivery Vehicle 7,250 Property Taxes 3 105,000 Administrative Wages & Salaries 123,750 Sales Commission 2% of Net Profit before Commission 1 Of the total utilities, 80% relates to manufacturing and 20% relates to general and administrative costs. 2 Of the total insurance, 66⅔% relates to the manufacturing facilities & 33⅓% relates to the office area 3 The property taxes should be shared: 75% factory facilities & 25% general & administrative costs Explain the difference between a product cost and a period cost. How does the product cost of a manufacturer differ from the product cost of a merchandiser?
All School Logos & More (ASLM) design and manufacture school uniform crests. After production,
the crests are placed into individual plastic cases, before being transferred into Finished Goods. The
accounting records of the business for the quarter to December 31, 2021, for the manufacturing of uniform
crests for Hill Point High School are given below.
Inventory 1/10/2021 31/12/2021
Raw Materials $72,000 $65,000
Work in Progress $138,875 $129,125
Finished Goods $149,500 $141,700
Other information:
Sales Revenue $1,694,950
Factory Labour 239,700
Raw Materials Purchased 235,000
Office Cleaner’s Wages 4,500
Factory Supplies Used 23,500
Total Utilities 1 118,750
Plant Supervisor’s Salary 180,000
Design Costs (School Logo) 4,300
Packaging Material Cost 35,000
Total Insurance 2 60,000
Delivery Vehicle Drivers’ Wages 41,250
Depreciation: Delivery Vehicle 7,250
Property Taxes 3 105,000
Administrative Wages & Salaries 123,750
Sales Commission 2% of Net Profit before Commission
1 Of the total utilities, 80% relates to manufacturing and 20% relates to general and administrative costs.
2 Of the total insurance, 66⅔% relates to the manufacturing facilities & 33⅓% relates to the office area
3 The property taxes should be shared: 75% factory facilities & 25% general & administrative costs
Explain the difference between a product cost and a period cost. How does the product cost of a
manufacturer differ from the product cost of a merchandiser?
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