Question

Asplund Corporation has provided the following information:
 

	Cost per Unit	Cost per Period
Direct materials	$ 6.25
Direct labor	$ 2.90
Variable manufacturing overhead	$ 1.30
Fixed manufacturing overhead		$ 18,000
Sales commissions	$ 1.50
Variable administrative expense	$ 0.45
Fixed selling and administrative expense		$ 7,500

 

Required:

a. For financial reporting purposes, what is the total amount of product costs incurred to make 5,000 units?

b. For financial reporting purposes, what is the total amount of period costs incurred to sell 5,000 units?

Answer 1

a.

Direct materials	$ 6.25
Direct labor	2.90
Variable manufacturing overhead	1.30
Variable manufacturing cost per unit	$ 10.45
Total variable manufacturing cost ($10.45 per unit × 5,000 units produced)	$ 52,250
Total fixed manufacturing overhead cost	18,000
Total product (manufacturing) cost	$ 70,250

b.

Sales commissions	$ 1.50
Variable administrative expense	0.45
Variable selling and administrative expense per unit	$ 1.95
Total variable selling and administrative expense ($1.95 per unit × 5,000 units sold)	$ 9,750
Total fixed selling and administrative expense	7,500
Total period (nonmanufacturing) cost	$ 17,250

a.Total product (manufacturing) cost   $ 70,250

b.Total period (nonmanufacturing) cost  $ 17,250