Question

Reese Ltd.'s records shows the following balances for the year 20x2: Direct materials, beginning inventory Direct materials, ending inventory Direct material purchases Advertising expense Indirect labour Selling costs Direct labour Property taxes on factory building $56004 81555 118979 274430 98173 47419 218714 15614 What were Reese's product costs for the year? Select one: a. $425929 b. $451480 $321849 d. 5312142

Please show all steps so I can fully understand how to solve. thank you

Answer 1

Product costs are the direct costs that are required for producing a product.
They include direct material cost, direct labor cost and factory overheads.
In the given question, the direct materials used has not been given as a
worked out figure. It has to be arrived at as below:
Direct materials, beginning inventory	$         56,004
Add: Direct materials purchases	$      1,18,979
Total direct materials available for use	$      1,74,983
Less: Direct materials, ending inventory	$         81,555
Direct material cost		$        93,428
To the above figure of direct material cost,
the direct labor cost and the factory overhead cost.
Direct labor cost		$ 2,18,714
Factory overhead cost:
Indirect labor	$          98,173
Property taxes on factory building	$          15,614	$   1,13,787
Total product cost = 93428+218714+113787 =		$    4,25,929
Answer: [a] $425,929