Question

Rustic Living furniture company manufactures furniture at its central Kentucky factory. Some of its costs from the past year include:Wages paid to maintenance workers $60,000Fabric used to upholster furniture 8,000Wages paid to assembly line workers 100,000Lumber used to buildproduct 15,000Sales commissions 7,500Insurance cost for factory 21,000Freight in (raw materials) 3,000Utilities in factory 12,000Factory Supervisor Salary 60,000Depreciation on factory equipment 18,000Utilities in sales office 26,500Costs of delivery to customers8,000Depreciation on sales office1,000Lubricants used in factory equipment 500Product costs for Rustic Living totaled(a) $297,500(b) $203,500(c) $273,500(d) $295,000

Answer 1

Answer:

a) 297,500

Explanation:

Given that list of costs, the ones that are just period cost or expenses are:

• sales commissions
• utilities in sales office
• costs of delivery to customers
• depreciation on sales office

Note that these expenses are not needed in manufacturing the product, they count toward marketing the product, but not its "design."

The ones that counts towards the product manufacturing are:

• wages paid to maintenance workers $60,000

• fabric used to upholster furniture  $8,000

• wages paid to assembly line workers $100,000

• lumber used to build product  $15,000

• insurance cost for factory   $21,000

• freight in (raw materials)   $3,000

• utilities in factory                   $12,000

• factory supervisor salary   $60,000

• Depreciation on factory equipment $18,000

• costs of delivery to customers  $8,000

• depreciation on sales office   $1,000

• lubricants used in factory equipment $500

For a total of $297,500