Enterprises, Inc.'s principal product is a hammer that carries a lifetime guarantee. Cost and product data for the hammer follows:
Direct Materials:
Anodized Steel: 1 kilograms per hammer at $2 per kilogram
Leather strapping for handle: 0.5 square meter per hammer at $4 per square meter.
Direct Labor:
Forging operation: $24 per hour; 6 minutes per hammer
Leather wrapping operation: $20 per direct labor hour; 12 minutes per hammer
Overhead:
Forging operation: rate equals 40 percent of department's direct labor dollars
Leather-wrapping operation: rate equals 60 percent of department's direct labor dollars.
In October, November, and December, Enterprises expects to produce 108,000, 104,000, and 100,000 hammers, respectively. The company has no beginning or ending balances of direct materials inventory or work in process inventory for the year.
1. For the three-month period ending December 31, prepare monthly production cost information for the hammer. Classify the costs as direct materials, direct labor, or overhead, and show your computations.
2. Prepare a cost of goods manufactured budget for the hammer. Show monthly cost data and combined totals for the quarter for each cost category.