Buttfuski is a specialty brownie company in Aspen Colorado t

Buttfuski is a specialty brownie company in Aspen, Colorado that produces and sells alternative style brownies with extremely high quality, taste, mindfulness and service. The owner would like to identify the various costs incurred during each year in order to plan and control the costs in the business. Buttfuski’s costs are the following (in thousands of dollars):

            Required:

            (1.) What is the total amount of product costs?

            (2) What is the total amount of period costs?

Utilities for the bakery Paper used in packaging product Salaries and wages in the bakery Cookie ingredients Bakery labor fringe benefits Administrative costs Bakery equipment maintenance Depreciation of bakery plant and equipment2,200 Uniforms for bakers Insurance for the bakery Rent for administration offices Advertising $ 2,100 180 23,500 43,500 1,300 2,300 800 750 900 18,500 3,500 1,100 13,000 2,600 500 Boxes, bags, and cups used in the bakery Office Manager\'s salarv Overtime premiums Idle Time

Solution

Product Costs

Costs that become part of the cost of goods manufactured are called product costs. Such costs are incurred on manufacturing process either directly as material and labor costs or indirectly as overheads.

product cost = utilities of bakery + paper used in packaging+salaries and wages+cookie ingredients+fringe benefits+eqipement maintenance+depreciation+uniform of bakers+overtime premiums+idle time+

= 2100+180+23500+43500+1300+800+2200+750+2600+500

=$77430

period cost

Period costs are basically all costs other than product costs. These are not incurred on the manufacturing process and therefore these cannot be assigned to cost goods manufactured. Period costs are thus expensed in the period in which they are incurred.

= adm.cost+insurance+rent for adm. offices+advertising+office managers salary

=2300+900+18500+3500+13000

=$38200

note: it is assumed bags, cups expenses are the inventories and may be used more than one year since not included in the material cost.