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Watson Inc. is a manufacturing company operating in the southeastern United States. The company has three primary product lines, as well as several secondary lines.
Watson Inc. is a manufacturing company operating in the southeastern United States. The company has three primary product lines, as well as several secondary" lines. The company's controller is in the process of preparing the annual financial statements and will need to classify the following cost objects as either product costs or period costs. For each of these costs, determine the amounts that will be considered product costs versus the amounts that will be considered period costs. Product Costs Period Costs Cost Object 1. Watson paid $2.5 million in interest costs for a new debt issuance 2 | the proceeds were used to fund the construction of a new manufacturing plant. 2. Payments to SE EMC, the utilities company which provides both gas and electric to Watson, totaled $3.6 million for the year 3. The invoice price for raw materials for the year totaled 4 $9,415,200, which included a discount of 2 percent off of the original purchase prices and freight-in of $7,200. 4. Watson spent S5.1 million on advertising costs during the year, 5 with S350,000 of the total representing the salaries of the staff in the promotions department. 5. Rent costs for several buildings located outside of the company's 6 |main campus and used to manufacture secondary product lines Watson Inc. is a manufacturing company operating in the southeastern United States. The company has three primary product lines, as well as several secondary" lines. The company's controller is in the process of preparing the annual financial statements and will need to classify the following cost objects as either product costs or period costs. For each of these costs, determine the amounts that will be considered product costs versus the amounts that will be considered period costs. Product Costs Period Costs Cost Object 1. Watson paid $2.5 million in interest costs for a new debt issuance 2 | the proceeds were used to fund the construction of a new manufacturing plant. 2. Payments to SE EMC, the utilities company which provides both gas and electric to Watson, totaled $3.6 million for the year 3. The invoice price for raw materials for the year totaled 4 $9,415,200, which included a discount of 2 percent off of the original purchase prices and freight-in of $7,200. 4. Watson spent S5.1 million on advertising costs during the year, 5 with S350,000 of the total representing the salaries of the staff in the promotions department. 5. Rent costs for several buildings located outside of the company's 6 |main campus and used to manufacture secondary product lines
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