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2 August, 12:40

Kwik Delivery Service reports the following costs and expenses in June 2013. Indirect materials $ 8,400 Driver's salaries $14,000 Depreciation on delivery Advertising 5,100 equipment 11,200 Delivery equipment Dispatcher's salary 5,000 repairs 300 Property taxes on office Office supplies 650 building 870 Office utilities 1,490 CEO's salary 12,000 Repairs on office Gas and oil for delivery trucks 3,200 equipment 180 Instructions Determine the total amount of (a) delivery service (product) costs and (b) period costs.

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  1. 2 August, 14:38
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    service cost: 41,800

    period cost: 20,590

    Explanation:

    delivery service cost: those who are related to the deliveries

    Indirect materials 8,400

    Depreciation on delivery equipment 11,200

    Dispatcher's salary 5,000

    Gas and oil for delivery trucks 3,200

    Driver's salaries 14,000

    Total: 41,800

    period cost: those who can be linker directly or indirectly throught allocation of overhead into the delviery cost.

    Repairs on office equipment 180

    Office utilities 1,490

    Office supplies 650

    Property taxes on office building 870

    Advertising 5,100

    CEO's salary 12,000

    *Repairs delivery equipment 300

    Total: 20,590

    While the repair are made on delivery equipment they cannot be linked to an specific delivery or allocated as they do not incease the capacity, this isn't maintenance this is repairs those, expense for the period.
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