2. Calaculation of amount of period costs incurred to sell 10000 units.
PERIOD COSTS are those costs which incurred over a period of time irrespective of production activity.
Amount of period costs:
Particulars | ($) |
Fixed selling expense ($3×10000units) | $30000 |
Fixed administrative expense ($2×10000units) | $20000 |
Sales commission ($1×10000units) | $10000 |
Variable administrative expense ($0.50×10000units) | $5000 |
TOTAL PERIOD COSTS | $65000 |
*Other costs like direct materials, direct labor and manufacturing overheads are product costs and hence they were not considered as period costs.
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