Felix's Fine Jewelry produces fine jewelry for department stores. The following costs incurred by the company may be classified as direct materials, direct labor, manufacturing overhead, or period costs.
|
a.
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Wages paid to Jewelry workers
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$ 1,200,000
|
|
b.
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Utilities in the administrative area
|
300,000
|
|
c.
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Depreciation on chain linking machinery utilized in the plant
|
200,000
|
|
d.
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Silver, gold, and gemstones used in producing necklaces
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4,000,000
|
|
e.
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Company attorney's salary
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150,000
|
|
f.
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Lease rental charge on forklift for material and finished goods handling
|
10,000
|
|
g.
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Telephone expense for customer service office
|
20,000
|
|
h.
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Wages of plant heating and cooling technicians
|
100,000
|
|
i.
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Utilities for the assembly area of the plant
|
250,000
|
|
j.
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Maintenance on computers utilized in the administrative assistant's office
|
1,500
|
|
k.
|
Salary paid to the CEO
|
200,000
|
|
l.
|
Fine paid for introducing cyanide into the local water supply
|
1,000,000
|
|
m.
|
Signature red jewelry boxes used for packaging
|
50,000
|
|
n.
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Expedited freight of product to major customer
|
50,000
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Instructions:
Classify the costs and total by classification. Assume Felix's Fine Jewelry's revenue for the period was $8,000,000 and there is no change in ending inventory. Prepare an operating income statement that shows the deductions of expense in terms of total classification by category: direct materials, direct labor, manufacturing overhead, or period costs.