# A manufacturing company prepays its insurance coverage for a

A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is \$5,130 and is paid at the beginning of the first year. Ninety percent of the premium applies to manufacturing operations and 10% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?

A. Product \$1,539 & Period \$171
B. Product \$5,130 & Period \$0
C. Product \$3,078 & Period \$342
D. Product \$4,617 & Period \$513

At the beginning of the year, manufacturing overhead for the year was estimated to be \$267,500. At the end of the year, actual direct labor-hours for the year were 22,100 hours, the actual manufacturing overhead for the year was \$262,500, and manufacturing overhead for the year was over applied by \$13,750. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been:

A. 21,000 direct labor-hours
B. 21,400 direct labor-hours
C. 22,100 direct labor-hours
D. 19,900 direct labor-hours

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