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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Cost Classification

Loring Company incurred the following costs last year:

Chapter 2, Problem 39E, Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify , example  1

Required:

  1. 1. Classify each of the costs using the following table format. Be sure to total the amounts in each column. Example: Direct materials, $216,000.

Chapter 2, Problem 39E, Cost Classification Loring Company incurred the following costs last year: Required: 1. Classify , example  2

  1. 2. What was the total product cost for last year?
  2. 3. What was the total period cost for last year?
  3. 4. If 30,000 units were produced last year, what was the unit product cost?

1.

To determine

Classify each cost as a product cost or period cost.

Explanation

Product Cost:

The amount of cost whether direct or indirect incurred by the company in order to produce a product is known as product cost. It also means the cost incurred by the company in acquiring a product and making it available for sale.

Period costs can be defined as the costs, which are not associated with the process of manufacturing. Selling and distribution expenses are examples of period costs.

The classification of the costs is given below:

 Product costPeriod cost
CostsDirect materials ($)Direct labor ($)Manufacturing Overhead ($)Selling expense ($)Adminis-trative expense ($)
Direct materials216,000    
Factory rent  24,000  
Direct labor 120,000   
Factory utilities  6,300  
Supervisi...

2.

To determine

Calculate the amount of product cost for the previous year.

3.

To determine

Calculate the amount of period cost for the last year.

4.

To determine

Calculate the amount of unit product cost.

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