Question

THE Company applies overhead to products using a
pre-determined rate of $6 per direct labor hour.
During 2021, THE Company had the following costs:

Direct materials purchased ...........  $150,000
Direct labor .........................   175,000
Factory utilities ....................    33,000
Depreciation, office equipment .......    24,000
Advertising ..........................    47,000
Indirect labor .......................    18,000
Shipping goods to customers ..........    13,000
Property taxes, factory building .....    32,000

THE Company's inventory accounts for 2021 were:

                     January 1      December 31
Direct materials      33,000          40,000
Work in process       69,000          55,000
Finished goods        28,000          22,000

Direct labor workers are paid $14 per hour.

The period costs for 2021 were equal to:

Answer 1

Period Cost:
Period cost are those cost which are not directly charged to Production but they
incurred with periodically and debited to income statement.
So it means cost which are incurred peridically like Rent, Insurance, Depreciation,
Property Taxes, Advertisement Travel expenses and interest expenses are
covered under period cost
Solution:
Calculation of Period Cost
		Amount
Depreciation office Equipment		$              24,000
Advertising		$              47,000
Property Taxes , Factory Building		$              32,000
Total		$           1,03,000
Answer = Period Cost = $ 103,000