Question

Ohno 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). Ohno’s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment		$11,800
Insurance on factory building		2,400
Raw materials (plastics, polystyrene, etc.)		79,400
Utility costs for factory		1,000
Supplies for general office		400
Wages for assembly line workers		62,600
Depreciation on office equipment		900
Miscellaneous materials (glue, thread, etc.)		1,300
Factory manager’s salary		6,500
Property taxes on factory building		500
Advertising for helmets		14,300
Sales commissions		10,900
Depreciation on factory building		1,700

Answer 1

	Product Costs
	Direct Materials	Direct Labor	Manufacturing Overhead	Period Costs
Rent on factory equipment			11800
Insurance on factory building			2400
Raw materials (plastics, polystyrene, etc.)	79400
Utility costs for factory			1000
Supplies for general office				400
Wages for assembly line workers		62600
Depreciation on office equipment				900
Miscellaneous materials (glue, thread, etc.)			1300
Factory manager’s salary			6500
Property taxes on factory building			500
Advertising for helmets				14300
Sales commissions				10900
Depreciation on factory building			1700
Total costs	79400	62600	25200	26500
Production cost per helmet	16.72	=(79400+62600+25200)/10000