A Manufacturing Company Prepays Its Insurance Coverage for a Three-Year

question 72

Multiple Choice

A manufacturing company prepays its insurance coverage for a three-year period.The premium for the three years is $2,700 and is paid at the beginning of the first year.Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities.What amounts should be considered product costs and period costs respectively for the first year of coverage?
$\begin{array} { l cc } & \underline { \text { Product Costs } } & { \text { Period Costs } } \\\text { A) } & \$ 2,700 & \$ 0 \\\text { B) } & \$ 2,160 & \$ 540 \\\text { C) } & \$ 1,440 & \$ 360 \\\text { D) } & \$ 720 & \$ 180\end{array}$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

Financial Success

The achievement of financial goals and objectives, often measured by wealth, income, or the ability to afford desired lifestyles.

Nonessential

Not absolutely necessary or required; can be omitted without affecting the essence or main purpose.

Emotional Appeal

A persuasive technique that targets the audience's feelings and emotions to influence their attitudes or behaviors.

Uncompromising Safety

A strict and unwavering commitment to maintaining safety standards to prevent harm or danger in any environment.