Question

Kwik Delivery Service reports the following costs and expenses in June 2013. Indirect materials $ 8,400 Driver's salaries $14,000 Depreciation on delivery Advertising 5,100 equipment 11,200 Delivery equipment Dispatcher's salary 5,000 repairs 300 Property taxes on office Office supplies 650 building 870 Office utilities 1,490 CEO's salary 12,000 Repairs on office Gas and oil for delivery trucks 3,200 equipment 180 Instructions Determine the total amount of (a) delivery service (product) costs and (b) period costs.

Answer 1

Answer:

service cost:   41,800

period cost:   20,590

Explanation:

delivery service cost: those who are related to the deliveries

Indirect materials                                 8,400

Depreciation on delivery  equipment 11,200

Dispatcher's salary                               5,000

Gas and oil for delivery trucks            3,200

Driver's salaries                                 14,000  

Total:                                                    41,800

period cost:  those who can be linker directly or indirectly throught allocation of overhead into the delviery cost.

Repairs on office equipment         180

Office utilities                               1,490

Office supplies                               650

Property taxes on office  building 870  

Advertising                                   5,100

CEO's salary                               12,000

*Repairs delivery equipment          300    

Total:                                         20,590

While the repair are made on delivery equipment they cannot be linked to an specific delivery or allocated as they do not incease the capacity, this isn't maintenance this is repairs those, expense for the period.