Question

Problem 2.41A a-b Par Play Company, a manufacturer of driver golf dubs, started production in November 2020. For the preceding five years, Par Play had been a retailer of sports equipment. After a thorough survey of driver golf club markets, Par Play decided to turn its retail store into a driver golf dub factory Raw materials costs will total $24 per driver. Workers on the production lines are paid on average $17 per hour. A driver usually takes 2 hours to complete. In addition, the rent on the equipment used to produce drivers amounts to $1,590 per month. Indirect materials cost $5 per driver. A supervisor was hired to oversee production; her monthly salary is $4,050. Factory janitorial costs are $1,790 monthly. Advertising costs for the drivers will be $6,240 per month. The factory building depreciation expense is $9,840 per year. Property taxes on the factory building will be $7,500 per year. Complete the following answer sheet assuming that Par Play manufactures, on average, 2,500 drivers per month, and enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate heading. Total the dollar amounts in each of the columns Direct Materials Product Costs Direct Labour Manufacturing Overhead Period Costs Cost Item Raw materials $ Wages for workers Rent on equipment Indirect materials Factory supervisor's salary Factory Janitorial costs Version 4.24.20

Answer 1

Answer:-

a)

		Product Costs
Cost Item		Direct Materials		Direct Labour		Manufact. Overhead		Period Costs
Raw materials (1) Wages for workers (2) Rent on equipment Indirect materials (3) Factory supervisor’s salary Janitorial costs Advertising Depreciation – factory building (4) Property taxes – factory building (5)		$60,000 $60,000		$85,000 $85,000		$ 1,590  12,500   4,050   1,790     820     625 $21,375		$6,240 $6,240

(1)   $24 × 2,500 = $60,000.

(2)   $17 × 2 hrs × 2,500 = $85,000.

(3)   $5 × 2,500 = $12,500.

(4)   $9,840/12 = $820.

(5)   $7,500/12 = $625.

(b)   Total production costs

  Direct materials   $ 60,000

  Direct labour   85,000

  Manufacturing overhead     21,375

  Total production cost $166,375

  Production cost per driver = $166,375 ÷ 2,500 = $66.55