Question: 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.