Answer :
Answer:
Product Period
$665 $285
Product Cost=$665.
Period Cost=$285.
Explanation:
Product Period
$665 $285
Given Data:
The premium for the three years=$2,850
Premium applies to manufacturing operations=70%=0.7
Premium applies to selling and administrative activities=30%=0.3
Total Number of years= 3 years
Required:
Product Cost=?
Period Cost=?
Solution:
Amount for first Year=[tex]\frac{Total\ Amount}{Number \ of\ years}[/tex]
Amount for first Year=[tex]\frac{\$2,850}{3}=\$950[/tex]
Now:
Product Cost:
Premium applies to manufacturing operations=70%=0.7 of above amount
Product Cost=$950*0.7
Product Cost=$665.
Period Cost:
Premium applies to selling and administrative activities=30%=0.3
Period Cost=$950*0.3
Period Cost=$285.