Bell Company, a manufacturer of audio systems, started its production in October

Question

Bell Company, a manufacturer of audio systems, started its production in October 2014. 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 $ 14 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $ 5,185 per month. Indirect materials cost $ 6 per system. A supervisor was hired to oversee production; her monthly salary is $ 3,358. Factory janitorial costs are $ 2,054 monthly. Advertising costs for the audio system will be $ 9,064 per month. The factory building depreciation expense is $ 6,600 per year. Property taxes on the factory building will be $ 9,420 per year. Prepare an answer sheet with the following column headings. Assuming that Bell manufactures, on average, 1,561 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.

Explanation / Answer

Costs for 1,561 audio systems Direct Materials Direct Labor Manufacturing Overhead Period Costs Raw Materials $1,20,197 Wages for workers $1,09,270 Rent for Equipment $5,185 Indirect Materials $9,366 Factory Supervisors Salary $3,358 Janitorial costs $2,054 Advertising $9,064 Depreciation on Factory building $6,600 Property taxes on Factory building $9,420 Total Monthly expenses $1,20,197 $1,09,270 $14,778 $30,269 Total Monthly expenses $2,74,514 Audio System per month                  1,561 Production cost per system $175.86

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