Use information below to answer the following questions.
Oswald Ltd manufactures a wide range of leather suitcases. The following costs are expected to be incurred by the company during June: $\begin{array}{lr}
\text { Ind irect labour cost } & \$ 26,000 \
\text { Direct labour time } & 10,000 \text { hours }\
\text { Depreciation on equipment } & \$ 20,000 \
\text { Rent and Rates } & \$ 13,000 \
\text { Direct labour costs } & \$ 98,000 \
\text { Heating, lighting and power } & \$ 4,000 \
\text { Machine time } & 8,000\text { hours } \
\text { Indirect materials } & \$ 5,000 \
\text { Consumables } & \$ 2,000 \
\text { Direct materials used } & \$ 50,000 \
\text { Production estimate } & 1,000\text { suitcases }\
\end{array}$
-Refer to the table above. The full cost of producing the suitcases for May is:
A)$220,000.
B)$218,000.
C)$207,000.
D)$187,000.

Question

Quizplus · Accepted Answer

The full cost includes both direct and indirect costs. Direct costs are direct labor ($98,000) and direct materials ($50,000). Indirect costs include indirect labor ($26,000), depreciation ($20,000), rent and rates ($13,000), heating, lighting, and power ($4,000), indirect materials ($5,000), and consumables ($2,000). Adding these gives a total cost of $218,000.

Use Information Below to Answer the Following Questions -Refer to the Table Above