Giant Manufacturing Co. specializes in manufacturing different models of bicycles. Assume that the market has responded enthusiastically to a new model, the Jaguar. As a result, the company has established a separate manufacturing facility to produce these bicycles. The company produces 1,000 of these bicycles per month. Giant's monthly manufacturing cost and other expenses data related to these bicycles are as follows.
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1.
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Rent on manufacturing equipment (lease cost)
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$2,000/month
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2.
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Insurance on manufacturing building
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$750/month
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3.
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Raw materials (frames, tires, etc.)
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$80/bicycle
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4.
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Utility costs for manufacturing facility
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$1,000/month
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5.
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Supplies for administrative office
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$800/month
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6.
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Wages for assembly line workers in manufacturing facility
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$30/bicycle
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7.
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Depreciation on office equipment
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$650/month
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8.
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Miscellaneous materials (lubricants, solders, etc.)
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$1.20/bicycle
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9.
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Property taxes on manufacturing building
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$2,400/year
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10.
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Manufacturing supervisor's salary
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$3,000/month
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11.
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Advertising for bicycles
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$30,000/year
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12.
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Sales commissions
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$10/bicycle
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13.
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Depreciation on manufacturing building
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$1,500/month
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Instructions
(a)Prepare an answer sheet with the following column headings.
Product Costs
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Cost
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Direct
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Direct
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Manufacturing
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Period
|
|
Item
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Materials
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Labor
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Overhead
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Costs
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Enter each cost item on your answer sheet, placing an "X" under the appropriate headings.
(b) Compute total manufacturing costs for the month.