Homework Answers
Insurance premium for 3 year = $3,600
Insurance expense for 1 year = 3,600 x 1/3
= $1,200
Insurance expense related to manufacturing operations = 1,200 x 80%
= $960
Insurance expense related to selling and administrative activities = 1,200 x 20%
= $240
Hence, Product cost = $960
Period cost = $240
Second option is the correct option.
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