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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 (80% of its full capacity).

Ohno's monthly manufacturing cost and other expense data are as follows:

Rent on factory equipment $13,900
Insurance on factory building 2,330
Raw materials (plastics, polyethylene, etc) 10,500
Utility costs for factory 990
Supplies for general office 330
Wages for assembly line workers 67,000
Depreciation on office equipment 540
Miscellaneous materials (glue, thread, etc.) 2,350
Factory manager's salary 6,600
Property taxes on factory building 450
Advertising for helmets 14,500
Sales administration 10,540
Depreciation on factory building 1,650

Required:

Prepare an answer sheet with the following column headings:

Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs

Enter each cost item on your answer sheet, placing the dollar amount under the appropriate headings. Total the dollar amounts in each of the columns.

Period Cost:

A manufacturing company usually incurs both product and period costs. A period cost is an expenditure incurred that is not directly related to the product but rather to the overall organization (e.g. executive salaries).

Answer and Explanation: 1

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See below.

Cost Item Direct Materials Direct Labor Manufacturing Overhead Period Costs
Rent on factory equipment 13,900
Insurance on factory...

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Period Costs in Accounting: Definition & Examples

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Chapter 1 / Lesson 13
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Period costs in accounting refers to the method of recording non-production expenses within the period in which the costs are incurred. Learn about the definition, discover how income and expenses relate to profit, and see real-world examples of period costs vs. product costs.


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