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Ohno Company specializes in manufacturing a unique model of bicycle helmet. The model is well...

Question:

Ohno 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 10,000 helmets per month (BD% of its full capacity). Ohno's monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment $11,900
Insurance on factory building 2,330
Raw materials (plastics, polystyrene, etc.) 80,500
Utility costs for factory 990
Supplies for general office 330
Wages for assembly line workers 67,000
Depreciation on office equipment 840
Miscellaneous materials (glue. thread, etc.) 1,240
Factory managers salary 6,600
Property taxes on factory building 490
Advertising for helmets 14,500
Sales commissions 10,540
Depreciation on factory building 1,650

a. Prepare an answer sheet with the following column headings.

Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
Rent on factory equipment
Insurance on factory building
Raw materials
Utility costs for factory
Supplies for general office
Wages for assembly line workers
Depreciation on office equipment
Miscellaneous materials
Factory manager?s salary
Property taxes on factory building
Advertising for helmets
Sales commissions
Depreciation on factory building

b. Compute the cost to produce one helmet.

Manufacturing Costs

Manufacturing Costs are costs necessary in producing a product or converting an item to its saleable form. Examples of manufacturing costs are Materials, Labors and Overhead. These costs could also be direct or indirect.

Answer and Explanation: 1

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a. Answer sheet is completed as follows:

Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
Rent on factory equipment 11...

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Manufacturing Costs of Job Order Cost Systems

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Chapter 5 / Lesson 2
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Job order costing systems organize costs according to units or products, common in service and production companies. Learn the importance of journals in recording manufacturing costs and how period costs are included as well.


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