P1-1B Agler Company specializes in manufacturing motorcycle helmets. The company has enough orders to keep the factory production at 1,000 motorcycle helmets per month. Agler’s monthly manufacturing cost and other expense data are shown on the next page.

 

 

 

 

 

Maintenance costs on factory building	$ 1,500
Factory manager’s salary	5,500
Advertising for helmets	8,000
Sales commissions	4,000
Depreciation on factory building	700
Rent on factory equipment	6,000
Insurance on factory building	3,000
Raw materials (plastic, polystyrene, etc.)	25,000
Utility costs for factory	800
Supplies for general office	200
Wages for assembly line workers	54,000
Depreciation on office equipment	500
Miscellaneous materials (glue, thread, etc.)	2,000

 

 

(a) DM $25,000 DL $54,000 MO $19,500

 

Instructions

(a)  Prepare an answer sheet with the following column headings.

                     Product Costs                      

 

PC $12,700	Cost	Â	Direct	Â	Direct	Â	Manufacturing	Â	Period
Â	Item	Â	Materials	Â	Labor	Â	Overhead	Â	Costs

 

 

 

 

 

 

Classify manufacturing costs into different categories and compute the unit  cost.

(LO 3, 4), AP

 

 

 

 

 

 

 

 

 

(a) DM $57,500 DL $75,000 MO $15,200

 

Enter each cost item on your answer sheet, placing the dollar amount under the ap- propriate headings. Total the dollar amounts in each of the columns.

(b)  Compute the cost to produce one motorcycle helmet.