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 10,280 helmets per month (80% of its full capacity). Lott’s monthly manufacturing cost and other expense data are as follows.
Rent on factory equipment $9,240 Insurance on factory building 1,810 Raw materials (plastics, polystyrene, etc.) 76,750 Utility costs for factory 780 Supplies for general office 200 Wages for assembly line workers 50,880 Depreciation on office equipment 850 Miscellaneous materials (glue, thread, etc.) 2,370 Factory manager’s salary 5,360 Property taxes on factory building 520 Advertising for helmets 13,590 Sales commissions 9,770 Depreciation on factory building 1,300

Explanation / Answer

9240

2370

Product Costs Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs Rent on factory equipment

9240

Insurance on factory building 1810 Raw materials 76750 Utility costs for factory 780 Supplies for general office 200 Wages for assembly line workers 50880 Depreciation on office equipment 850 Miscellaneous materials

2370

Factory manager’s salary 5360 Property taxes on factory building 520 Advertising for helmets 13590 Sales commissions 9770 Depreciation on factory building 1300 TOTAL 79120 56240 24340 13720 173420 TOTAL HELMETS 10280 PER HELMET COST $   16.87

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