Rango Enterprises' manufacturing costs for 2014 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?

Question

Rango Enterprises' manufacturing costs for 2014 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?

Quizplus · Accepted Answer

Product costs for external reporting include direct materials, direct labor, and all manufacturing overhead (both variable and fixed). Therefore, the total product costs are $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 2014 Are as Follows What Amount Should Be Considered as Product Costs for External