Question

Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw material costs for an audio system will total $75 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 6 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,900 per month. Indirect materials cost $6 per system. A supervisor was hired to oversee production; her monthly salary is $3.800. Factory janitorial costs are $1,700 monthly. Advertising costs for the audio system will be $8,900 per month. The factory building depreciation expense is $6,000 per year. Property taxes on the factory building will be $9,600 per year. (a) Assuming that Bell manufactures, on average, 1,000 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns. Product Costs Direct Labor Direct Materials Cost Item Manufacturing Overhead Period Costs Raw materials Wages for workers Rent on equipment Indirect materials Factory supervisor's salary Janitorial costs Advertising Depreciation on factory building Property taxes on factory building

Answer 1

Product costs

Cost item	Direct materials	Direct Labour	Manufacturing overhead	Period cost
Raw materials	1,000×75 =$75,000
Wages for workers		1,000×6×13=$78,000
Rent on equipment			$5,900
Indirect materials			1,000×6=$6,000
Factory supervisors salary			$3,800
Janitorial costs			$1,700
Advertising				$8,900
Depreciation on factory building			$6,000/12=$500
Property tax on factory building			$9,600/12=$800
	$75,000	$78,000	$18,700	$8,900

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