Question

MapleTown Co., manufactures clamps used in the overhead bin latches of several Bobble

airplane models. Jimmy Bacon, president of MapleTown Co., has gathered and provided you

the following cost information from the company’s accounting records for the latest month of

operations:

Advertising:$25,000

Fire insurance premium for the factory building:$6,250

Sales office utilities:$2,500

Air filters for the buffing machines used to produce the clamps:$1,875

Aluminum used to produce the clamps:$37,500

Rent on the factory building:$10,000

Freight to ship the clamps to customer:$3,125

Sales department executives’ salaries:$42,500

Production supervisors’ salaries:$22,500

Assembly line workers’ wages:$60,000

Jimmy Bacon needs the following calculations:

a)

   Calculate the total period costs for the month.

b)

   Calculate the total product costs for the month.

c)

   Calculate the amount of manufacturing overhead incurred for the month.

Answer 1

SOLUTION

(A)  Total period costs for the month = Advertising + Sales office utilities + Freight to ship the clamps to customer + Sales department executives’ salaries

= $25,000 + $2,500 + $3,125 + $42,500

= $73,125

Total period costs for the month = $73,125

(B) Total product costs for the month = Fire insurance premium for the factory building + Air filters for the buffing machines used to produce the clamps + Aluminum used to produce the clamps + Rent on the factory building + Production supervisors’ salaries + Assembly line workers’ wages

= $6,250 + $1,875 + $37,500 + $10,000 + $22,500 + $60,000

= $138,125

Total product costs for the month = $138,125

(C) Manufacturing overhead incurred for the month = Fire insurance premium for the factory building + Air filters for the buffing machines used to produce the clamps + Rent on the factory building + Production supervisors’ salaries

= $6,250 + $1,875 + $10,000 + $22,500

= $40,625

Manufacturing overhead incurred for the month = $40,625