P1-1A Lott Company specializes in manufacturing a unique model of bicycle helmet

Price: $3.99


P1-1A Lott 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). Lott’s monthly
manufacturing cost and other expense data are as follows.

Rent on factory equipment $ 9,000
Insurance on factory building 1,500
Raw materials (plastics, polystyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general offi ce 300
Wages for assembly line workers 53,000
Depreciation on offi ce 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

Instructions

(a) Prepare an answer sheet with the following column headings.

Product Costs
Cost Direct Direct Manufacturing Period
Item Materials Labor Overhead 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.

(b) Compute the cost to produce one helmet.