If total warehousing cost for the year amounts to $950,000, and 35 percent of the warehousing activity is associated with finished goods and 65 percent with direct materials, how much of the cost would be charged as a product cost?
A)$285,000
B)$332,500
C)$617,500
D)$950,000

Question

Quizplus · Accepted Answer

Product costs include all costs involved in acquiring or making a product, which encompasses both direct materials and finished goods. Therefore, the total product cost is the sum of the costs associated with direct materials (65%) and finished goods (35%), which equals 100% of the warehousing costs.

If Total Warehousing Cost for the Year Amounts to $950,000