Product Costs Direct Materials Direct Labor Manufacturing Overhead Period Costs

Question

Product Costs

Direct Materials

Direct Labor

Manufacturing Overhead

Period Costs

Lott Company specializes in manufacturing a unique model of bicycle helmet. The model is well accepted by consumers, and the company has enough orders to keep the factory production at 11,280 helmets per month (80% of its full capacity). Lott’s monthly manufacturing cost and other expense data are as follows.
Rent on factory equipment $8,980 Insurance on factory building 1,820 Raw materials (plastics, polystyrene, etc.) 76,970 Utility costs for factory 600 Supplies for general office 350 Wages for assembly line workers 48,420 Depreciation on office equipment 610 Miscellaneous materials (glue, thread, etc.) 1,320 Factory manager’s salary 5,960 Property taxes on factory building 390 Advertising for helmets 13,970 Sales commissions 9,940 Depreciation on factory building 1,590

Explanation / Answer

Part A)

__________

Part B)

The cost to produce 1 helmet is calculated with the use of following table:

Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Rent on factory equipment 8,980 Insurance on factory building 1,820 Raw materials 76,970 Utility costs for factory 600 Supplies for general office 350 Wages for assembly line workers 48,420 Depreciation on office equipment 610 Miscellaneous materials 1,320 Factory manager’s salary 5,960 Property taxes on factory building 390 Advertising for helmets 13,970 Sales commissions 9,940 Depreciation on factory building 1,590 $76,970 $48,420 $20,660 $24,870

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