Advertising Costs $ 12 comma 000 Indirect Labor 7 comma 000 CEO's Salary 460 comma 000 Direct Labor 54 comma 000 Indirect Materials Used 7 comma 500 Direct Materials Used 540 comma 000 Factory Utilities 840 Factory Janitorial Costs 1 comma 700 Manufacturing Equipment Depreciation 2 comma 200 Delivery Vehicle Depreciation 1 comma 230 Administrative Wages and Salaries 36 comma 900 How much were Durand's period costs?

$510,130

Explanation:

Costs can be classified into two categories: Product Costs and Period Costs. Product costs are the manufacturing costs that are incurred in the production of goods and services. Under absorption costing, product costs include direct materials, direct labor, indirect materials, indirect labor, and other factory overhead. These costs are capitalized and expensed out when related goods and services are sold out.

On the other hand, period costs are selling & administrative expenses. These costs are never capitalized and expensed out in the statement of profit or loss as soon as incurred. Examples of period costs are advertisement expenses, depreciation expenses (not related to factory), sales commissions, administrative salaries and wages.

Calculation of Period Costs

Advertising costs                                                           $12,000

CEO's salary                                                                  460,000

Delivery vehicle depreciation                                            1,230

Administrative wages and salaries                                 36,900

Total Period Costs                                                        $510,130

Total Period Cost   $ 510,130

Explanation:

Period cost are those wich are not capitalzied through inventory as they aren't involve in the manufacturing process.

Therefore, direct material, direct labor and factory overhead concepts are excluded.

Advertising Costs                                 12,000

CEO's Salary                                     460,000

Delivery Vehicle Depreciation               1,230

Administrative Wages and Salaries    36,900

Total Period Cost                                 510,130

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