The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted)
$\begin{array}{llr}
\text {Direct materials and direct labor } &\$700,000\
\text { Other variable manufacturing costs} &100,000\
\text { Depreciation of factory building and manufacturing equipment} &80,000\
\text { Other fixed manufacturing costs } &18,000\

\end{array}$

What amount should be considered product costs for external reporting purposes?

Question

The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted)
$\begin{array}{llr}
  \text {Direct materials and direct labor  } &\$700,000\
 \text {  Other variable manufacturing costs} &100,000\
 \text {  Depreciation of factory building and manufacturing equipment} &80,000\
 \text { Other fixed manufacturing costs } &18,000\

\end{array}$

What amount should be considered product costs for external reporting purposes?

Quizplus · Accepted Answer

Product costs for external reporting include all manufacturing costs: direct materials, direct labor, variable manufacturing costs, and fixed manufacturing costs, including depreciation. Therefore, $700,000 + $100,000 + $80,000 + $18,000 = $898,000.

The Shoal Company's Manufacturing Costs for the Third Quarter of 2019