Question

Problem 2.41A a-b Par Play Company, a manufacturer of driver golf clubs, 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 club factory. Raw materials costs will total $24 per driver. Workers on the production lines are paid on average $16 per hour. A driver usually takes 2 hours to complete. In addition, the rent on the equipment used to produce drivers amounts to $1,980 per month. Indirect materials cost $5 per driver. A supervisor was hired to oversee production; her monthly salary is $3,800. Factory janitorial costs are $1,550 monthly. Advertising costs for the drivers will be $6,090 per month. The factory building depreciation expense is $9,900 per year. Property taxes on the factory building will be $7,440 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. Product Costs Cost Item Direct Materials Direct Labour Manufacturing Overhead    Period Costs Raw materials $ $ $    $ Wages for workers    Rent on equipment    Indirect materials    Factory supervisor’s salary    Factory janitorial costs    Advertising    Depreciation–factory building    Property taxes–factory building    $ $ $    $

Calculate the cost to produce one driver. (Round answer to 2 decimal places, e.g. 15.25.) Production cost per driver $

Answer 1

Cost Item Product Costs Direct Direct materials labor $ 60,000 $ 80,000 Manufacturing Period overhaed Costs Raw Materials Wages for Workers Rent on Equipment Indirect Materials Factory supervisor's salary Factory Janitorial costs Advertising Depreciation - Factory Building Property taxes - factory Building $ $ $ $ 1,980 12,500 3,800 1,550 $ 6,090 825 620 21,275$ 6,090 $ $ $ 60,000$ 80,000 $ Production cost per driver S 64.51 Working Notes : Raw Material = 2,500*$24 = $60,000 Wages for workers = 2,500*2*$16 = $80,000 Indirect Materials = 2,500*5 = $12,500 Depreciation on Factory Building = $9,900/12 = $825 Property taxes on factory building = $7,440/12 = $620 Production Cost = direct Materials + Direct Labor + Manufacturing Overhead = $60,000+$80,000 + $21,275 = $161,275 Production Cost per driver = $161,275/2,500 = $64.51