Bell Company, a manufacturer of audio systems, started its production in October 2017. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw materials cost for an audio system will total $75 per unit. Workers on the production lines are on average paid $15 per hour. An audio system usually takes 7 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,120 per month. Indirect materials cost $6 per system. A supervisor was hired to oversee production; her monthly salary is $3,840. Factory janitorial costs are $1,410 monthly. Advertising costs for the audio system will be $8,750 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $9,000 per year. Assuming that Bell manufactures, on average, 1,520 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns. Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Raw materials $ $ $ $ Wages for workers Rent on equipment Indirect materials Factory supervisor’s salary Janitorial costs Advertising Depreciation on factory building Property taxes on factory building $ $ $ $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bell Company, a manufacturer of audio systems, started its production in October 2017. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory.

Raw materials cost for an audio system will total $75 per unit. Workers on the production lines are on average paid $15 per hour. An audio system usually takes 7 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,120 per month. Indirect materials cost $6 per system. A supervisor was hired to oversee production; her monthly salary is $3,840.

Factory janitorial costs are $1,410 monthly. Advertising costs for the audio system will be $8,750 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $9,000 per year.

Assuming that Bell manufactures, on average, 1,520 audio systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.

	Product Costs
Cost Item	Direct Materials	Direct Labor	Manufacturing Overhead	Period Costs
Raw materials	$	$	$	$
Wages for workers
Rent on equipment
Indirect materials
Factory supervisor’s salary
Janitorial costs
Advertising
Depreciation on factory building
Property taxes on factory building
	$	$	$	$

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