Reference no: EM132633209

Problem 1: What was the period cost incurred for the month of December?

20-Dec Depreciation for the month of December was recorded on equipment was $750 ($150 for equipment used in the factory and the remainder for equipment used in selling and administrative activities).

Recorded in the General Journal:

20-Dec Manufacturing Overhead $ 150

Depreciation Expense $ 600

Accumulative Depreciation $ 750

This is how it was recorded in the Income Statement (the $600 expense mainly for this example):

Sales

Sales Revenue $ 32,000.00

Less: Cost of goods sold $ 10,950.00

Gross margin $ 21,050.00

Selling and administrative expenses

Advertising expenses $ 1,600.00

Salaries and wages Expenses $ 2,000.00

Depreciation expenses $ 600.00

Total expenses $ 4,200.00

Net operating income $ 16,850.00