Question

Knight Company reports the following costs and expenses in May. Factory utilities $16,800 Direct labor $72,600 Depreciation on factory equipment 14,350 Sales salaries 46,700 Depreciation on delivery trucks 4,200 Property taxes on factory building 3,500 Indirect factory labor 52,500 Repairs to office equipment 1,700 Indirect materials 84,300 Factory repairs 2,970 Direct materials used 138,700 Advertising 16,700 Factory manager’s salary 8,400 Office supplies used 3,370 From the information:
(a) Manufacturing overhead
(b) Product costs
(c) Period costs

Answer 1

Answer:

(a) Manufacturing overhead  = $182,820

(b) Product costs  = $391,420

(c) Period costs = $72,670

Explanation:

a. The computation of the manufacturing overhead is shown below:

= Factory utilities + Depreciation on factory equipment + Property taxes on factory building + Indirect factory labor + Indirect materials + Factory repairs+ Factory manager salary

= $16,800+ $14,350 + $3,500 + $52,500 + $84,300 + $2,970 + $8,400

= $182,820

b. The computation of the product cost is shown below:

= Direct materials used + Direct labor + manufacturing overhead

= $138,700 + $72,600 + $182,820

= $391,420

c. The computation of the period cost is shown below:

= Sales salaries + Depreciation on delivery trucks + Repairs to office equipment + Advertising + Office supplies used  

= $46,700 + $4,200 + $1,700 + $16,700 + $3,370

= $72,670