If the total warehousing cost for the year amounts to $350,000,and 40 percent of the warehousing activity is associated with finished goods and 60 percent with direct materials,how much of the cost would be charged as a product cost?
A)$70,000
B)$140,000
C)$210,000
D)$350,000

Question

Quizplus · Accepted Answer

Product costs include all costs involved in acquiring or making a product, which in this case includes both the costs associated with finished goods and direct materials. Since 40% of the warehousing activity is associated with finished goods and 60% with direct materials, 100% of the warehousing costs are considered product costs. Therefore, $350,000 (100% of the total warehousing cost) would be charged as a product cost. However, the calculation provided in the explanation mistakenly suggests that the answer should reflect a portion of the cost, when in fact, the question asks for the amount charged as a product cost, which encompasses both finished goods and direct materials, totaling 100% of the warehousing costs.

If the Total Warehousing Cost for the Year Amounts to $350,000,and