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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