Question

Below are the costs for a dairy processing company for the month of July. What is the company’s total period costs? Cost of milk purchased from local dairy farmers $500,000 Depreciation on the computer of the salesperson $300 Property tax on the dairy processing plant $10,000 Gasoline used to operate refrigerated trucks delivering finished dairy products to grocery stores $20,000 The CEO’s salary $90,000 Depreciation on refrigerated trucks used to collect raw milk from local dairy farmers $25,000 Plastic gallon containers in which milk is packaged $50,000 Research and development on improving milk pasteurization process $40,000 Radio advertising for the Company’s products $4,000 Wages paid to the machine operators the at dairy processing plant $35,000 $ 144,300 $ 164,300 $ 150,300 $ 154,300

Answer 1

Calculation of total period costs

Depreciation on the computer of the salesperson	300
Gasoline used to operate refrigerated trucks delivering finished dairy products to grocery stores	20,000
CEO’s salary	90,000
Research and development on improving milk pasteurization process	40,000
Radio advertising for the Company’s products	4,000
Total period costs	$154,300

Total period costs = $154,300

Fourth option is correct.

All other costs are product costs.