Question
In: Accounting
Lease Equipment Cost and INSURANCE ON PLANT BUILDING of a Manufacturing Company is a Manufacturing Cost...
Lease Equipment Cost and INSURANCE ON PLANT BUILDING of a Manufacturing Company is a Manufacturing Cost or a Non Manufacturing Cost (Period Cost) ? Explain With Example
Solutions
Expert Solution
Manufacturing costs are the costs that are incurred in order to produce a product after that product has gone through the manufacturing process that includes materials, labor and other manufacturing overheads. Any cost incurred directly into the production or manufacturing of that product is treated as manufacturing costs.
Lease Equipment Cost does not involve in manufacturing process as it is a cost which Lessee agrees to pay to the Lessor to use the equipment under the lease, hence, it is a non-manufacturing cost.
Insurance on Plant Building of a Manufacturing Company is treated as Manufacturing Cost under the Manufacturing Overheads because it is also part of the cost of the product under the Manufacturing Overheads.
ekkarill92 answered 2 years agoRelated Solutions
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Alpha Company has three components in their lease agreement: the building, the equipment and the maintenance...
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Equipment
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Maintenance/Service
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Total
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Indirect Labor
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Rent (70% factory)
5,000
Equipment Repair
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Direct Materials
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Utilities(85% factory)
1,600
Direct Labor
9,000
Commissions
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Advertising Expense
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Applied MOH
8,900
Insurance expense (30% administrative)
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Administrative Costs
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Beginning WIP
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Ending WIP
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opportunity costs. Explain your answer and show your work.
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