2-7

Loring Company incurred the following costs last year:

Direct materials $216,000
Factory rent 24,000
Direct labor 120,000
Factory utilities 6,300
Supervision in the factory 50,000
Indirect labor in the factory 30,000
Depreciation on factory equipment 9,000
Sales commissions 27,000
Sales salaries 65,000
Advertising 37,000
Depreciation on the headquarters building 10,000
Salary of the corporate receptionist 30,000
Other administrative costs 175,000
Salary of the factory receptionist 28,000
Required
1. Classify each of the above costs using the table format given below. Be sure to
total the amounts in each column.
Example: Direct materials $216,000
Product Cost Period Cost
Direct Direct Selling
Administrative
Costs Materials Labor Overhead Expense Expense
Direct
materials $216,000
2. What was the total product cost for last year?
 3. What was the total period cost for last year?
4. If 30,000 units were produced last year, what was the unit product cost?
Jawab :
1.
Product Cost Period Cost
Cost Overhea Selling Administrative
Direct Material Direct Labor
d Expense Expense
Direct materials $216,000        
Factory rent     $24,000    
Direct labor   $120,000      
Factory utilities     $6,300    
Supervision in the factory     $50,000    
Indirect labor in the factory     $30,000    
Depreciation on factory equipment     $9,000    
Sales commissions       $27,000  
Sales salaries       $65,000  
Advertising       $37,000  
Depreciation on the headquarters
building         $10,000
Salary of the corporate receptionist         $30,000
Other administrative costs         $175,000
Salary of the factory receptionist     $28,000    
TOTALS $216,000 $120,000 $147,300 $129,000 $215,000

2. Direct Material $216,000

Direct Labor $120,000
Overhead $147,300
Total Product Cost is $483.300

3. Selling Expense $129,000

Administrative Expense $215,000
Total Period Cost is $344.000

4. Unit Product Cost = $483.300/$30.000 = $16,11

2-10
Sterling Company manufactures laundry detergent. At the beginning of February, the
following information was supplied by its accountant:
Raw materials inventory $73,000
Work-in-process inventory 80,400
Finished goods inventory 62,000
During February, direct labor cost was $210,400, raw materials’ purchases were
$301,800, and the total overhead cost was $478,590. The inventories at the end of
February were
Raw materials inventory $ 56,000
Work-in-process inventory 103,000
Finished goods inventory 95,240
Required
1. Prepare a statement of cost of goods manufactured for February.
2. Prepare a statement of cost of goods sold for February.
Jawab :

1. Sterling Company
Statment of Cost of Goods Manufactured
For the Month Ended February 28, 20XX
Direct Material :
Begining inventory $ 73,000
Add: Purchases 301,800
Material Available $ 374,800
Less: Ending inventory 56,000
Direct material uses $ 301,800
Direct labor 210,400
Manufacturing overhead 478,590
Total manufacturing cost added $ 1,007,790
Add: Beginning work in process 80,400
Total manufacturing cost $ 1,088,190
Less: Ending work in process 103,000
Cost of goods manufactured $ 985,190

2. Sterling Company
Statment of Cost of Goods Manufactured
For the Month Ended February 28, 20XX
Beginning finished goods inventory 62,000
Add: Cost of goods manufactured $ 985,190

Cost of goods available for sale $ 1,047,190

Less: Ending finished goods inventory 95,240
Cost of goods sold $ 951,950