Question

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 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 Miscellaneous materials (glue, thread, etc.) Factory manager's salary Property taxes on factory building Advertising for helmets Sales commissions Depreciation on factory building $11,500 1,700 77,100 900 400 59,700 900 1,500 6,400 500 14,500 10,900 1,700

Answer 1

Classification

	Product Cost
	Direct material	Direct labor	Manufacturing overhead	Period cost
Rent on factory equipment			11500
Insurance on factory building			1700
Raw material	77100
utilities costs for factory			900
Supplies for general office				400
Wages for assembly line workers		59700
Depreciation on office equipment				900
Miscellaneous material			1500
Factory manager's salary			6400
Property taxes on factory building			500
Advertising for helmets				14500
Sales commission				10900
Depreciation on factory building			1700
Total	77100	59700	24200	26700

Cost of produce one helmet = (77100+59700+24200)/10000 = 16.10