A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $3,360 and is paid at the beginning of the first year. Seventy percent of the premium applies to manufacturing operations and thirty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?Product PeriodA) $3,360 $0B) $2,352 $1,008C) $1,568 $672D) $784 $336

Answer:Amount considered for product = $784Amount considered for period cost = $336Step-by-step explanation:Given:The total premium for 3 years = $3,360Percentage of premium applied to manufacturing operations = 70%Percentage of premium applied to administrative activities = 30%thus,the premium per year = [tex]\frac{\textup{3360}}{\textup{3}}[/tex]  = $1,120Now, Amount considered for product = premium applied to manufacturing operationsorAmount considered for product = 70% of the premium for the first yearorAmount considered for product = 0.70 × $1,120 = $784and,Amount considered for period cost = premium applied to administrative activitiesorAmount considered for period cost = 30% of the premium for the first yearorAmount considered for period cost = 0.30 × $1,120 = $336