Question

Problem 1-2A (Video) Bell Company, a manufacturer of audio systems, started its production in October 2020. 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 material costs for an audio system will total $76 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 6 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,400 per month. Indirect materials cost $7 per system. A supervisor was hired to oversee production; her monthly salary is $3,300. Factory janitorial costs are $1,500 monthly. Advertising costs for the audio system will be $9,200 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $8,400 per year. Assuming that Bell manufactures, on average, 1,000 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 $ $ $ $ LINK TO TEXT Compute the cost to produce one audio system. (Round answer to 2 decimal places, e.g. 15.25.) Production cost per system $

Answer 1

	Direct Materials	Direct Labor	Manufacturing Overhead	Period Costs
Raw materials	76000
Wages for workers		78000
Rent on equipment			5400
Indirect materials			7000
Factory supervisor’s salary			3300
Janitorial costs			1500
Advertising				9200
Depreciation on factory building			600
Property taxes on factory building			700
	76000	78000	18500	9200
2
Production cost per system	172.50	=(76000+78000+18500)/1000