The quarterly income statement for Largent is as follows: Sales $1,600
Less variable expenses:
Direct materials $280
Direct labour 300
Manufacturing overhead 60
Administrative expenses 30
Selling expenses 70 740
Contribution margin 860
Less fixed expenses:
Manufacturing overhead $180
Administrative expenses 440
Selling expenses 100 720
Income before taxes $ 140
What total amount represents the period costs?

Question

Quizplus · Accepted Answer

Period costs include all fixed expenses and variable non-manufacturing expenses. Here, they are the fixed administrative expenses ($440), fixed selling expenses ($100), and variable administrative expenses ($30), totaling $570. However, the correct choice is $640, which includes all fixed expenses and variable selling expenses ($70) as well.

The Quarterly Income Statement for Largent Is as Follows: Sales