Question

Phaup Corporation's relevant range of activity is 3.000 units to 7.000 units. When it produces and sells 5.000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 4.85 Direct labor $ 4.00 Variable manufacturing overhead $ 1.75 Fixed manufacturing overhead $ 3.90 Fixed selling expense $ 0.90 Fixed administrative expense $ 0.60 Sales commissions $ 0.50 Variable administrative expense $ 0.45 For financial reporting purposes, the total amount of period costs incurred to sell 7.000 units is closest to: O $17.150 O $101.500 O $14,150 $37,800

Answer 1

Period cost are those cost which are not directly included in  the production cost of a prodct.

it icludes :

• overhead cost
• general expenses
• sales related expenses
• admiistrative charges etc

COMPUTATION OF PERIOD COST		AMOUNT ($)
Fixed Selling Expenses		0.9
Fixed Administration Expenses		0.6
Sales Commission		0.5
Variable Administration Expenses		0.45
Period Cost Per Unit		2.45
		AMOUNT ($)
TOTAL UNITS		7000
PERIOD COST PER UNIT		2.45
TOTAL PERIOD COST	7000*$ 2.45	17150

TOTAL PERIOD COST IS $ 17150