Question

Sheridan 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). Sheridan’s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment		$11,100
Insurance on factory building		2,500
Raw materials (plastics, polystyrene, etc.)		77,400
Utility costs for factory		900
Supplies for general office		400
Wages for assembly line workers		62,300
Depreciation on office equipment		900
Miscellaneous materials (glue, thread, etc.)		1,400
Factory manager’s salary		6,100
Property taxes on factory building		400
Advertising for helmets		14,400
Sales commissions		10,600
Depreciation on factory building		1,700

Enter each cost item on your answer sheet, placing the dollar amount 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
Rent on factory equipment		$		$		$		$
Insurance on factory building
Raw materials
Utility costs for factory
Supplies for general office
Wages for assembly line workers
Depreciation on office equipment
Miscellaneous materials
Factory manager’s salary
Property taxes on factory building
Advertising for helmets
Sales commissions
Depreciation on factory building
		$		$		$		$

Answer 1

Solution

Cost Item	Direct Materials	Direct Labor	Manufacturing Overhead	Period cost
Rent on factory equipment			$ 11,100.00
Insurance on factory building			$   2,500.00
Raw materials	$ 77,400.00
Utility costs for factory			$      900.00
Supplies for general office				$      400.00
Wages for assembly line workers		$ 62,300.00
Depreciation on office equipment				$      900.00
Miscellaneous materials			$   1,400.00
Factory manager’s salary			$   6,100.00
Property taxes on factory building			$      400.00
Advertising for helmets				$ 14,400.00
Sales commissions				$ 10,600.00
Depreciation on factory building			$   1,700.00
	$ 77,400.00	$ 62,300.00	$ 24,100.00	$ 26,300.00