Question

Problem 19-1A

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 $11,700
Insurance on factory building 2,120
Raw materials (plastics, polystyrene, etc.) 80,100
Utility costs for factory 980
Supplies for general office 410
Wages for assembly line workers 66,600
Depreciation on office equipment 880
Miscellaneous materials (glue, thread, etc.) 1,490
Factory manager’s salary 6,400
Property taxes on factory building 420
Advertising for helmets 15,000
Sales commissions 10,330
Depreciation on factory building 1,630

Prepare an answer sheet with the following column headings.

Enter each cost item on your answer sheet, placing the dollar amount 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
Rent on factory equipment
$
$
$
$
Insurance on factory building
Raw materials
Utility costs for factory
Supplies for general office
Wages for assembly line workers
Depreciation on office equipment
Miscellaneous materials
Factory manager’s salary
Property taxes on factory building
Advertising for helmets
Sales commissions
Depreciation on factory building
$
$
$
$

LINK TO TEXT

Compute the cost to produce one helmet. (Round answer to 2 decimal places, e.g. 15.25.)

Production cost per helmet $

Answer 1

	Product Costs			Period Costs
Cost Item	Direct Materials	Direct Labor	Manufacturing Overhead
Rent on factory equipment			11700
Insurance on factory building			2120
Raw materials	80100
Utility costs for factory			980
Supplies for general office				410
Wages for assembly line workers		66600
Depreciation on office equipment				880
Miscellaneous materials			1490
Factory manager's salary			6400
Property taxes on factory building			420
Advertising for helmets				15000
Sales commissions				10300
Depreciation on factory building			1630
Totals $	80100	66600	24740	26590

Production cost per helmet = ($80100 + $66600 + $24740)/10000 = $171440/10000 = $17.144 = $17.14