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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 and period costs respectively for the first year of coverage?

Product; Period

a. $2,700; $0
b. $2,160; $ 540
c. $1,440; $360
d. $720; $180

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M961091

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