P1-1A Lott 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). Lott’s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment                                        $ 9,000

Insurance on factory building                                      1,500 Raw materials (plastics, polystyrene, etc.)                                                                                            75,000 Utility costs for factory                            900

Supplies for general office                                                 300

Wages for assembly line workers                               53,000

Depreciation on office equipment                                    800

Miscellaneous materials (glue, thread, etc.)              1,100 Factory manager’s salary       5,700

Property taxes on factory building                                   400

Advertising for helmets                                                14,000

Sales commissions                                                        10,000

Depreciation on factory building                                  1,500

 

 

 

Instructions

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

                           Product Costs                            

Cost              Direct               Direct            Manufacturing             Period Item    Materials               Labor                         Overhead           Costs

                                                                                                                       

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.

(b)  Compute the cost to produce one helmet.