Rango Enterprises' manufacturing costs for 2017 are as follows: $$\begin{array} { l r }
\text { Direct materials } & \$ 65,000 \
\text { Direct labor } & 118,000 \
\text { Manufacturing supplies } & 9,000 \
\text { Depreciation of factory equipment } & 22,000 \
\text { Other fixed manufacturing overhead } & 43,000
\end{array}$$ What amount should be considered as product costs for external reporting purposes?
A)$183,000
B)$192,000
C)$257,000
D)$248,000

Question

Rango Enterprises' manufacturing costs for 2017 are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 65,000 \
\text { Direct labor } & 118,000 \
\text { Manufacturing supplies } & 9,000 \
\text { Depreciation of factory equipment } & 22,000 \
\text { Other fixed manufacturing overhead } & 43,000
\end{array}$$ What amount should be considered as product costs for external reporting purposes?
A)$183,000
B)$192,000
C)$257,000
D)$248,000

Quizplus · Accepted Answer

Product costs for external reporting purposes include all costs that are directly tied to the production process, which are direct materials, direct labor, and manufacturing overhead (which includes manufacturing supplies, depreciation of factory equipment, and other fixed manufacturing overhead). Adding these together: $65,000 (Direct materials) + $118,000 (Direct labor) + $9,000 (Manufacturing supplies) + $22,000 (Depreciation of factory equipment) + $43,000 (Other fixed manufacturing overhead) = $257,000.

Rango Enterprises' Manufacturing Costs for 2017 Are as Follows What Amount Should Be Considered as Product Costs for External