Answer:
To calculate the total period cost, only fixed costs which do not vary as a result of production activities are taken into consideration. Therefore, all variable costs are excluded.
The fixed costs include:
Fixed manufacturing overhead - $13,530
Fixed selling and administrative expense - $25,680
Total period cost = $39,210 (13,530 + 25,680)
Explanation:
Under variable costing, the period cost refers to costs that do not depend on production quantity or activity.
Period cost are related to the period instead of level of production or activity. Rent is a good example of a period cost.
In this example, the variable manufacturing overheads and variable selling and administrative expense are excluded since their values vary depending on the levels of manufacturing and selling activities. Therefore, their costs are tied to the products or services.
