Bell Company, a manufacturer of audio systems, started its production in October
ID: 3027243 • Letter: B
Question
Bell Company, a manufacturer of audio systems, started its production in October 2017. 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 materials cost for an audio system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.
Factory janitorial costs are $1,300 monthly. Advertising costs for the audio system will be $9,500 per month. The factory building depreciation expense is $6,600 per year. Property taxes on the factory building will be $9,000 per year.
Prepare an answer sheet with the following columns headings
Product Cost
Cost Item Direct Materials Direct Labor Manufacturing Overhead Period cost
Assuming that Bell manufactures, on average 1,500 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
and then compute the cost to produce one audio system
Explanation / Answer
Solution :-
Direct Material
Period cost
111000
This is the required answer.
Cost ItemDirect Material
Direct Labour Manufacturing OverheadPeriod cost
Raw Materials 111000 Wages for workers 90000 Rent on equipment 4900 Indirect material 7500 Factory Supervisor salary 3000 Janitorial cost 1300 Advertising 9500 Depreciation on factory building 550 Property taxes on Factory Building 750Related Questions
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