Question

1. Cost Classification

   Loring Company incurred the following costs last year:

   Costs	Amounts
   Direct materials	$211,000
   Factory rent	21,000
   Direct labor	120,000
   Factory utilities	6,300
   Supervision in the factory	55,000
   Indirect labor in the factory	38,000
   Depreciation on factory equipment	8,500
   Sales commissions	33,000
   Sales salaries	72,000
   Advertising	35,000
   Depreciation on the headquarters building	10,200
   Salary of the corporate receptionist	27,000
   Other administrative costs	183,000
   Salary of the factory receptionist	29,000

   
   Required:

   1. Classify each of the costs using the table provided. Be sure to total the amounts in each column. If an amount box does not require an entry, leave it blank. Direct materials is shown as an example.

   Loring Company
   Costs	Product Cost: Direct Materials		Product Cost: Direct Labor		Product Cost: Manufacturing Overhead		Period Cost: Selling Expense		Period Cost: Administrative Expense
   Direct materials	$211,000		$		$		$		$
   Factory rent
   Direct labor
   Factory utilities
   Supervision in the factory
   Indirect labor in the factory
   Depreciation on factory equipment
   Sales commissions
   Sales salaries
   Advertising
   Depreciation on the headquarters building
   Salary of the corporate receptionist
   Other administrative costs
   Salary of the factory receptionist
   Total	$		$		$		$		$

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   2. What was the total product cost for last year?
   The total product cost is $.

   3. What was the total period cost for last year?
   The total period cost is $.

   4. If 30,000 units were produced last year, what was the unit product cost? Round your answer to two decimal places.
   The total unit product cost is $.

Answer 1

Loring Company
Costs	Product cost: Direct materials	Product cost: Direct labor	Product cost: Manufacturing overhead	Period cost Selling expense	Period cost: Administrative expense
Direct material	$211,000
Factory rent			$21,000
Direct labor		$120,000
Factory utilities			6,300
Supervision in factory			55,000
Indirect labor in factory			38,000
Depreciation on factory equipment			8,500
Sales commission				$33,000
Salas salaries				72,000
Advertising				35,000
Depreciation on headquarters building					$10,200
Salary of corporate receptionist					27,000
Other administrative costs					183,000
Salary of factory receptionist			29,000
Total	$211,000	$120,000	$157,800	$140,000	$220,200

Total product cost for last year = $211,000+120,000+157,800 = $488,800

Total period cost for last year = $140,000+220,200 = $360,200

Total unit product cost = $488,800 / 30,000 = $16.29