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The Shoal Company's manufacturing costs for the third quarter of 2019 were as follows: (CPA adapted) Direct materials and direct labor $ 770,000 Other variable manufacturing costs 135,000 Depreciation of factory building and manufacturing equipment 87,000 Other fixed manufacturing costs 25,000 What amount should be considered product costs for external reporting purposes?

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Answer: $1,017,000

Explanation:

In calculating product costs we take the following, Direct materials and direct labor, Other variable manufacturing costs, Depreciation of factory building and manufacturing equipment and Other fixed manufacturing costs.

We add all of those with the result being the Product cost.

Calculating therefore would give us,

= 770,000 + 135,000 + 87,000 + 25,000

= $1,017,000

$1,017,000 is the amount that should be considered product costs for external reporting purposes.

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