MapleTown Co., manufactures clamps used in the overhead bin latches of several B
ID: 2340591 • Letter: M
Question
MapleTown Co., manufactures clamps used in the overhead bin latches of several Bobble
airplane models. Jimmy Bacon, president of MapleTown Co., has gathered and provided you
the following cost information from the company’s accounting records for the latest month of
operations:
Advertising:$25,000
Fire insurance premium for the factory building:$6,250
Sales office utilities:$2,500
Air filters for the buffing machines used to produce the clamps:$1,875
Aluminum used to produce the clamps:$37,500
Rent on the factory building:$10,000
Freight to ship the clamps to customer:$3,125
Sales department executives’ salaries:$42,500
Production supervisors’ salaries:$22,500
Assembly line workers’ wages:$60,000
Jimmy Bacon needs the following calculations:
a)
Calculate the total period costs for the month.
b)
Calculate the total product costs for the month.
c)
Calculate the amount of manufacturing overhead incurred for the month.
Explanation / Answer
SOLUTION
(A) Total period costs for the month = Advertising + Sales office utilities + Freight to ship the clamps to customer + Sales department executives’ salaries
= $25,000 + $2,500 + $3,125 + $42,500
= $73,125
Total period costs for the month = $73,125
(B) Total product costs for the month = Fire insurance premium for the factory building + Air filters for the buffing machines used to produce the clamps + Aluminum used to produce the clamps + Rent on the factory building + Production supervisors’ salaries + Assembly line workers’ wages
= $6,250 + $1,875 + $37,500 + $10,000 + $22,500 + $60,000
= $138,125
Total product costs for the month = $138,125
(C) Manufacturing overhead incurred for the month = Fire insurance premium for the factory building + Air filters for the buffing machines used to produce the clamps + Rent on the factory building + Production supervisors’ salaries
= $6,250 + $1,875 + $10,000 + $22,500
= $40,625
Manufacturing overhead incurred for the month = $40,625