Question

Question 1 1) Which of the following is NOT a period cost? A) B) C) D) Depreciation of factory maintenance equipment. Salary of a clerk who handles customer billing. Insurance on a company showroom where customers can view new products, Cost of a seminar concerning tax law updates that was attended by the company's controller.

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I have been struggling for a while, and mainly I need the answer!

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Answer 1

1) Which of the folowing is not a period cost.

ans) (A) Depreciation of factory maintanace equipment

examples of period costs include marketing expenses, office depreciation, and indirect labor. Also, interest expense on a company's debt would be classified as a period cost.

In the given question all are period costs except 'Depreciation on equipment'. It is a product cost as it is a manufacturing cost.

4) Explanation,

Given that,

Dept A,

Direct labor cost = $60,000

Manufacturing overhead = $90,000

Direct labor hours = 6,000

Machine-hours = 2,000

Dept B,

Direct labor cost = $40,000

Manufacturing overhead = $45,000

Direct labor hours = 9,000

Machine hours = 15,000

Predetermined overhead rates in Dept A

= MANUFACTURE OVER HEADS/DIRECT LABOUR COST*100

=90,000/60,000*100

=150%

Dept b = MANUFACTURE OVER HEADS/MACHINE HOUR

=45,000/15000

=$3

Answer: Option (C) is correct.