Question

Problem 14-2A (Part Level Submission) Bell Company, a manufacturer of audio systems, started its production in October 2017. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw materials cost for an audio system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000. Factory janitorial costs are $1,300 monthly. Advertising costs for the audio system will be $9,500 per month. The factory building depreciation expense is $7,800 per year. Property taxes on the factory building will be $9,000 per year. Collapse question part (a) Assuming that Bell manufactures, on average, 1,500 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Raw materials $ $ $ $ Wages for workers Rent on equipment Indirect materials Factory supervisor’s salary Janitorial costs Advertising Depreciation on factory building Property taxes on factory building $ $ $ $

Answer 1

Cost item	Product costs			Period costs
	Direct materials	Direct labor	Manufacturing overhead
Raw materials	111000 (1500*74)
Wages for workers		90000 (12*5*1500)
Rent on equipment			4900 (given)
Indirect materials			7500 (5*1500)
Factory supervisor’s salary			3000 (given)
Janitorial costs			1300 (given)
Advertising				9500 (given)
Depreciation on factory building			650 (7800/12)
Property taxes on factory building			750 (9000/12)
total	111000	90000	18100	9500

costs that are related to factory or production are product costs

costs that are related to selling, general administration are period costs.