[SOLVED] Arden Company reported the following costs and expenses for the most recent month: What is the total amount of product costs? Tot…..

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Arden Company reported the following costs and expenses for the most recent month Direct materials Direct labor Manufacturing overhead Selling expenses Administrative expenses $80,000 $42,000 $19,000 $22,000 $35,000 Required: 1. What is the total amount of product costs? Total product costs 2. What is the total amount of period costs? Total period costs 3. What is the total amount of conversion costs? Total conversion costs 4. What is the total amount of prime costs? Total prime costs

Arden Company reported the following costs and expenses for the most recent month: What is the total amount of product costs? Total product costs What is the total amount of period costs? Total period costs What is the total amount of conversion costs? Total conversion costs What is the total amount of prime costs? Total prime costs

Expert Answer

 

1. Products costs are raw material, labor, factory overheads like depreciation, fuel and packaging costs. Thus, Total product costs = Direct raw material + Direct labor + Manufacturing overhead = $80000 + $42000 + $19000 = $141000

2. Period costs are advertising, sales commissions, office supplies, office depreciation, legal and research and development costs. So, Total period costs are :selling and administrative expenses = $22000 + $35000 = $57000

3. conversion costs are the Direct labor and the Manufacturing overheads. Thus, Total Conversion costs = $42000 + $19000 = $61000

4. Prime cost are the Direct raw material and Direct labor costs attached to the products. So, Total Prime costs = DM + DL = $80000 + $42000 = $122000

 

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