Chapter 14 Problem P14 1A
TELE HEALTHCARE 1
January 12, 2021Chapter 14 Problem P14 1A
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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