22

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $3,090 and is paid at the beginning of the first year. Ninety percent of the premium applies to manufacturing operations and ten percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

Product

Period

a $3,090

$0

b $2,781

$309

c $1,854

$206

d $927

$103

which is correct?