Question

*Problem 1-2A 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 $77 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 6 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,070 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,700 Factory janitorial costs are $2,030 monthly. Advertising costs for the audio system will be $9,030 per month. The factory building depreciation expense is $6,360 per year. Property taxes on the factory building will be $8,520 per year Assuming that Bell manufactures, on average, 1,530 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 Direct Materials Direct Labor Manufacturing Overhead Period Costs Cost Item 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 Compute the cost to produce one audio system. (Round answer to 2 decimal places, e.g 15.25.) Production cost per system

Answer 1

Cost Item	Direct Materials ($)	Direct Labour ($)	Manufacturing Overhead ($)	Period Costs ($)
Raw Materials	1,17,810
	units 1530* $ 77
Wages for Workers		1,19,340
		6 hours * $13 * 1530 units
Rent on Equipment			5,070
Indirect Materials			7,650
			$5 * 1530 units
Factory Supervisor's salary			3,700
Janitorial Costs			2,030
Advertising				9,030
Depreciation on factory building			530
			$ 6360 / 12 months
Property taxes on factory building			710
			$ 8520/12 months
Total	$ 1,17,810	$ 1,19,340	$ 19,690	$ 9,030

Compute the cost to produce one audio system
Total Production costs	Amount $
Direct Materials	1,17,810
Direct Labour	1,19,340
Manufacturing Overhead	19,690
Total Costs (a)	$ 2,56,840
No of audio systems (b)	1530 units
Cost per unit (a/b)	$167.87