Copa Company, a manufacturer of stereo systems, started its production in Octobe

Question

Copa Company, a manufacturer of stereo systems, started its production in October 2010. For the preceding 3 years Copa had been a retailer of stereo systems. After a thorough survey of stereo system markets, Copa decided to turn its retail store into a stereo equipment factory.
Raw materials cost for a stereo system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. A stereo system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble stereo systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.
Janitorial costs are $1,300 monthly. Advertising costs for the stereo system will be $8,500 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $9,000 per year.

Explanation / Answer

Cost Statement =========== UnitCost TotalCost -------------- -------------- Production Per month 1300 Stereos RawMaterials 74.00 96,200 Labor ( 12 X 5 perstereo) 60.00 78,000 IndirectMaterilas 5.00 6,500 PrimeCost 139.00 180,700 FactoryRent 3.77 4,900 Supervisor'sSalary 2.31 3,000 Janitoral 1.00 1,300 Depreciation on FactoryBldg. 5.53 7,200 Property Tax on FactoryBldg. 6.92 9,000 FactoryCost 158.53 206,100 Advertising 6.54 8,500 TotalCost 165.07 214,600 Hope This helps Please Rate

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