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 $75 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 7 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,310 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,930. Factory janitorial costs are $2,330 monthly. Advertising costs for the audio system will be $9,050 per month. The factory building depreciation expense is $6,840 per year. Property taxes on the factory building will be $9,480 per year.

(a) Assuming that Bell manufactures, on average, 1,470 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. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Raw materials $ $ $ $ Wages for workers Rent on equipment Indirect materials Factory supervisor’s salary Janitorial costs Advertising Depreciation on factory building Property taxes on factory building $ $ $ $

Answer 1

Cost Item	Direct Material	Direct Labor	Manufacturing Overheads	Period Costs
Raw materials	$ 110,250
Wages for workers		$ 133,770
Rent on equipment			$                     5,310
Indirect materials			$                     7,350
Factory supervisor’s salary			$                     3,930
Janitorial costs			$                     2,330
Advertising				$                     9,050
Depreciation on factory building			$                        570
Property taxes on factory building			$                        790
Totals	$ 110,250	$ 133,770	$                   20,280	$                     9,050