Diecast Tools' manufacturing costs for 2017 are as follows: $$\begin{array} { l r }
\text { Direct materials } & \$ 100,000 \
\text { Direct labor } & 120,000 \
\text { Depreciation of factory equipment } & 30,000 \
\text { Production supervisor's salary } & 72,000 \
\text { Other fixed manufacturing overhead } & 50,000
\end{array}$$ What amount should be considered product costs for external reporting purposes?
A)$220,000
B)$293,000
C)$402,000
D)$372,000

Question

Diecast Tools' manufacturing costs for 2017 are as follows: $$\begin{array} { l r } 
\text { Direct materials } & \$ 100,000 \
\text { Direct labor } & 120,000 \
\text { Depreciation of factory equipment } & 30,000 \
\text { Production supervisor's salary } & 72,000 \
\text { Other fixed manufacturing overhead } & 50,000
\end{array}$$ What amount should be considered product costs for external reporting purposes?
A)$220,000
B)$293,000
C)$402,000
D)$372,000

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 (including depreciation of factory equipment, production supervisor's salary, and other fixed manufacturing overhead). Adding these together: $100,000 (Direct materials) + $120,000 (Direct labor) + $30,000 (Depreciation) + $72,000 (Supervisor's salary) + $50,000 (Other overhead) = $372,000.

Diecast Tools' Manufacturing Costs for 2017 Are as Follows What Amount Should Be Considered Product Costs for External Reporting