1) Fabila Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by customers, and the company has enough orders to keep the factory production at 10,000 helmets per month (80% of its full capacity). Fabila's company manufacturing cost and other expense data are as follows:
Rent on factory equipment $7,000
Insurance on factory building 1,500
Raw materials (plastics, polustyrene, etc.) 75,000
Utility costs for factory 900
Supplies for general office 300
Wages for assembly line workers 43,000
Depreciation on office equipment 800
Misc 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 7,000
Depreciation on factory building 1,500
a) Prepare an answer sheet with the following column headings.
Product Costs
Cost Item
Direct Materials (75,000)
Direct Labor (43,000)
Manufacturing Overhead (18,100)
Period Costs (22,100)
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.