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IrinaVladis [17]
3 years ago
7

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is

paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first full year of coverage?
Business
1 answer:
jasenka [17]3 years ago
6 0

Answer:

$720 and $180

Explanation:

According to the scenario, computation of the given data are as follows:

Premium for 3 years = $2,700

So, premium for 1 year = $2,700 ÷ 3 = $900 per year

Manufacturing operation percentage = 80%

Selling and administrative operation percentage = 20%

So, Premium for manufacturing operation = $900 × 80% = $720

And Premium for selling and admin operation = $900 × 20% = $180

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Answer:

a. $270,000

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