Question

Newspaper advertisements. . . . . . . . . . . . . . . . . . . . $5,100

Payment to consultant for advice on location of new store. . . . . . . . . . . . . . $2,300
Purchases of merchandise. . . . . . . . . . . . . . . . . . . . . $40,000
Freight-in. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,900
Salespeople's salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,200
Depreciation expense on delivery trucks. . . . . . . . . . $1,100
Research on whether store should sell satellite radio service. . . . . . . . $200
Customer Complaint Department. . . . . . . . . . . . . . . . . . $800
Rearranging store layout. . . . . . . . . . . . . . . . . . . . . . . . . $950

Required:
What is the total production cost?

Answer 1

Total production cost is $43,900.

Step-by-step explanation:

Total production cost refers to the addition of the direct materials, labor costs, and manufacturing overhead costs that are directly related to the production of a good.

From the question, total production cost can be calculated as follows:

Total production cost = Purchases of merchandise + Freight-in = $40,000 + $3,900 = $43,900

Therefore, total production cost is $43,900.