Question

Chno 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). Ono's monthly manufacturing cost and other expense data are as follows. Rent on factory equipment Insurance on factory building Raw materials (plastics, polystyrene, etc.) Utility costs for factory Supplies for general office Wages for assembly line workers Depreciation on office equipment Miscelaneous materials (glue, thread, etc.) Factory manager's salary Property taxes on factory building Advertising for helmets Sales commissions Depreciation on factory building $11,100 2,500 77,400 900 400 62,300 900 1,400 6,100 400 14,400 10,500 1,700

Answer 1

Unit Production Cost:

Cost Item
Direct Materials:
Raw materials	$77400
Direct Labor
Wages for assembly line workers	$62300
Manufacturing Overheads
Rent on factory equipment	$11100
Insurance on factory building	$2500
Utility costs for factory	$900
Miscellaneous materials	$1400
Factory manager’s salary	$6100
Property taxes on factory building	$400
Depreciation on factory building	$1700
Total Manfacturing Overheads	$24100
Total Production Cost	$163800
Units	10000 units
Production Cost per unit	$16.38

Production cost for one helmet = $16.38

Advertising for helmets,Sales commissions, depreciation on office equipment,Supplies for general office are not manufacturing costs and so not included in caculating production cost.

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