Question

Problem 14-01A 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 $11,300 Insurance on factory building Raw materials (plastics, polystyrene, etc.) 2,400 83,200 Utility costs for factory 1,000 Supplies for general office Wages for assembly line workers 400 58,200 900 Depreciation on office equipment Miscellaneous materials (glue, thread, etc.) 1,400 6,200 Factory manager's salary Property taxes on factory building Advertising for helmets 400 14,700 10,600 Sales commissions 1,700 Depreciation on factory building

Answer 1

	Product Costs			Period Costs
Cost Item	Direct Materials	Direct Labor	Manufacturing Overhead
Rent on factory equipment			11300
Insurance on factory building			2400
Raw materials	83200
Utility costs for factory			1000
Supplies for general office				400
Wages for assembly line workers		58200
Depreciation on office equipment				900
Miscellaneous materials			1400
Factory manager's salary			6200
Property taxes on factory building			400
Advertising for helmets				14700
Sales commissions				10600
Depreciation on factory building			1700
Totals $	83200	58200	24400	26600

Production cost per helmet = ($83200 + $58200 + $24400)/10000 = $165800/10000 = $16.58