Question:
Khan 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). Khan's monthly manufacturing cost and other expense data are as follows.
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Rent on factory equipment
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$ 7,000
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Insurance on factory building
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1,500
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Raw materials (plastics, polystyrene, etc.)
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75,000
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Utility costs for factory
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900
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Supplies for general office
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300
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Wages for assembly line workers
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43,000
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Depreciation on office equipment
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800
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Miscellaneous materials (glue, thread, etc.)
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1,100
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Factory manager's salary
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5,700
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Property taxes on factory building
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400
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Advertising for helmets
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14,000
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Sales commissions
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7,000
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Depreciation on factory building
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1,500
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(a) DM (Direct Materials) $75,000
DL (Direct Labor) $43,000
MO (Manufacturing Overhead) $18,100
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.
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Cost Item
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Direct Materials
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Direct Labor
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Manufacturing Overhead
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Period Costs
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(a) Compute the cost to produce one helmet.