Reference no: EM13492814
Question
a) Explain the difference between a Product cost and a Period cost. What potential problems does an inaccurate classification of product and period costs cause?
b) How is it possible that a raw material such as a glue might be considered as an indirect material for one furniture manufacturer and as a direct material for another furniture manufacturer?
c) Evans Inc. had the following activities during 2012:
Direct Materials:
Beginning inventory $40,000
Purchases $123,200
Ending inventory $20,800
Direct manufacturing labor $32,000
Manufacturing overheads $24,000
Beginning work in progress inventory $1,600
Ending work in progress inventory $8,000
Beginning finished goods inventory $48,000
Ending finished goods inventory $32,000
Required:
a. What is the cost of direct materials used during 2012?
b. What is the cost of goods manufactured for 2012?
c. What is cost of goods sold for 2012?
d. What amount of prime costs was added to production during 2012?
e. What amount of conversion costs was added to production during 2012?
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