Lott Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Lott”s monthly manufacturing cost and other expense data are as follows
|
Rent on factory equipment |
$9,000 |
|
Insurance on factory building |
1,500 |
|
Raw materials (plastics, polystyrene, etc.) |
75,000 |
|
Utility costs for factory |
900 |
|
Supplies for general office |
300 |
|
Wages for assembly line workers |
53,000 |
|
Depreciation on office equipment |
800 |
|
Miscellaneous materials (glue, thread, etc.) |
1,100 |
|
Factory manager”s salary |
5,700 |
|
Property taxes on factory building |
400 |
|
Advertising for helmets |
14,000 |
|
Sales commissions |
10,000 |
|
Depreciation on factory building |
1,500 |
Instructions
(a) Prepare an answer sheet with the following column headings.
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Product Costs |
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Cost |
Direct |
Direct |
Manufacturing |
Period |