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 $11,000 Insurance on factory building 1,500 Raw materials (plastics, polystyrene, etc.) 75,000 Utility costs for factory 900 Supplies for general office 300 Wages for assembly line workers 58,000 Depreciation on office equipment 800 Miscellaneous materials (glue, thread, etc.) 1,100 Factory manager's salary 5,700 Property taxes on factory building 400 Advertising for helmets 14,000 Sales commissions 10,000 Depreciation on factory building 1,500 Margin check figures provide key numbers to confirm that you are on the right track. Instructions (a) Prepare an answer sheet with the following column headings. Product Costs Cost ItemDirect MaterialsDirect LaborManufacturing OverheadPeriod Costs 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. DM $75,000 DL $58,000 MO $22,100 PC $25,100 (b) Compute the cost to produce one helmet.

Answer 1

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Ohno Company	Direct Materials	Direct Labor	MOH	Period Costs
Raw materials	75,000.00
Wages for assembly line workers		58,000.00
Rent on factory equipment			11,000.00
Insurance on factory building			1,500.00
Utility costs for factory			900.00
Supplies for general office				300.00
Depreciation on office equipment				800.00
Miscellaneous materials (glue, thread, etc.)			1,100.00
Factory manager's salary			5,700.00
Property taxes on factory building			400.00
Advertising for helmets				14,000.00
Sales commissions				10,000.00
Depreciation on factory building			1,500.00
Total	75,000.00	58,000.00	22,100.00	25,100.00
Cost to produce one helmet	Amount $
Direct Materials	75,000.00
Direct Labor	58,000.00
Manufacturing Overhead	22,100.00
Total production cost	155,100.00
Number of units	10,000.00
Cost to produce one helmet	7.50