Answer:
the total period cost for the month under variable costing is $46,700
Explanation:
Product Cost Under Variable Costing = Direct Materials + Direct Labor + Variable Overheads
Period Cost Under Variable Costing = Fixed Manufacturing Overheads + All Non-Manufacturing Overheads (Variable and Fixed)
Calculation for the total period cost - Varible Costing
Variable selling and administrative expense ( $ 7× 1,070 Units) $ 7,490
Fixed manufacturing overhead $ 13,530
Fixed selling and administrative expense $ 25,680
Total period cost for the month $46,700
Answer:
To calculate the total period cost, only fixed costs which do not vary as a result of production activities are taken into consideration. Therefore, all variable costs are excluded.
The fixed costs include:
Fixed manufacturing overhead - $13,530
Fixed selling and administrative expense - $25,680
Total period cost = $39,210 (13,530 + 25,680)
Explanation:
Under variable costing, the period cost refers to costs that do not depend on production quantity or activity.
Period cost are related to the period instead of level of production or activity. Rent is a good example of a period cost.
In this example, the variable manufacturing overheads and variable selling and administrative expense are excluded since their values vary depending on the levels of manufacturing and selling activities. Therefore, their costs are tied to the products or services.
