Problem - 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.
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Rent on factory equipment
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$11,900
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Insurance on factory building
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2,330
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Raw materials (plastics, polystyrene, etc.)
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80,500
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Utility costs for factory
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990
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Supplies for general office
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330
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Wages for assembly line workers
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67,000
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Depreciation on office equipment
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840
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Miscellaneous materials (glue, thread, etc.)
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1,240
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Factory manager's salary
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6,600
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Property taxes on factory building
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490
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Advertising for helmets
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14,500
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Sales commissions
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10,540
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Depreciation on factory building
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1,650
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a. 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.
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Product Costs
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Direct Material
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Direct Labor
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Manufacturing Overhead
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Period Cost
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Rent on factory equipment
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Insurance on factory building
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Raw materials
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Utility costs for factory
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Supplies for general office
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Wages for assembly line workers
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Depreciation on office equipment
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Miscellaneous materials
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Factory manager's salary
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Property taxes on factory building
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Advertising for helmets
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Sales commissions
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Depreciation on factory building
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b. Compute the cost to produce one helmet.