Lott 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). Lott”s monthly manufacturing cost and other expense data are as follows.

Rent on factory equipment

$ 9,000

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

53,000

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 Cost

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.

(b)Compute the cost to produce one helmet.

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