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 product costs?

Question

Quizplus · Accepted Answer

Product costs refer to the expenses directly related to the production of goods or services. In this case, the direct materials, direct labor, and manufacturing overhead expenses are product costs. So, the total amount of product costs for Largent is $280 + $300 + $60 = $640. This amount is only represented in option B.

The Quarterly Income Statement for Largent Is as Follows: Sales