You must complete both parts (a and b) of Problem P14-1A to earn full credit. You must submit your answers in Excel (only one Excel file will be graded – do not submit multiple Excel files). No Word document submissions will be graded.
Please read all of Chapter 14 before beginning this problem. The chapter will provide you with examples of the questions asked within this problem.
Feel free to discuss this problem with the rest of the class here.
P14-1A 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
$11,000
Insurance on factory building
1,500
Raw materials (plastics, polystyrene, etc.)
75,000
Utility costs for factory
900
Supplies for general office
300
Wages for assembly line workers
58,000
Depreciation on office equipment
800
Miscellaneous materials (glue, thread, etc.)
1,100
Factory manager’s salary
5,700
Property taxes on factory building
400
Advertising for helmets
14,000
Sales commissions
10,000
Depreciation on factory building
1,500
Instructions
(a) Prepare an answer sheet with the following column headings.
Product Costs
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.
(a) DM $75,000
DL $58,000
MO $22,100
PC $25,100
(b) Compute the cost to produce one helmet.
Classify manufacturing costs into different categories and compute the unit cost.
(LO 2), AP
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