Question

Complete the following questions using Microsoft Excel. No other submission format is allowed. Review the grading rubric to confirm you are meeting the assignment requirements. (All amounts in SAR except units.)

Given the following information for Dorttmund Corporation:
Advertising costs	320,000
Office rent	240,000
Direct materials	800,000
Delivery vehicle depreciation	90,000
Factory repair and maintenance	420,000
Sales salary	510,000
Indirect labor	220,000
Manufacturing equipment depreciation	180,000
Administrative salaries	360,000
President's salary	700,000
Sales revenue	5,200,000
Indirect materials	190,000
Direct labor	1,500,000
Machine hours	2,000
Direct Labor hours	10,000
Machine hours per unit	3
Direct labor hours per unit	6
Direct materials per unit	?
Units manufactured	500
Units sold	350

1. Identify (list) and total period costs
2. Calculate overhead per unit based on machine hours
3. Calculate total product costs for units manufactured
4. Calculate total cost of goods sold
5. Prepare income statement in good form assuming no beginning inventory

You must show all your work for credit.

Answer 1

solution a) period cost means cost which are not related to production of a product  such as selling , adevertising cost ,adminisatarion expenses etc.

for easily understanding ask a question to itself that the cost is directly or indirectly related to production if answer is No then it is period cost .

particuilars	amount
Advertising costs	3,20,000
office rent	2,40,000
Delivery vehicle depreciation	90,000
sales salary	5,10,000

Administrative salaries	3,60,000
president's salary	7,00,000
TOTAL PERIOD COST	22,20,000

solution b)

overhead cost

Advertising costs 3,20,000

Administrative salaries = 3,60,000

indirect labour =220,000

indirect material = 190,000

office rent =2,40,000

president salary = 700000

sales salary = 5,10,000

total overhead = 25,40,000

machine hours =2000

overhead per machine hour = 25,40,000 / 2000

= 1270 per hour

unit manufactured =500

machine hour per unit =2000/500 = 4 hours per unit  

overhead per unit based on machine hour = 4 x 1270 =5080