Compute total manufacturing costs for the month

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Reference no: EM13513394

Giant Manufacturing Co. specializes in manufacturing different models of bicycles. Assume that the market has responded enthusiastically to a new model, the Jaguar. As a result, the company has established a separate manufacturing facility to produce these bicycles. The company produces 1,000 of these bicycles per month. Giant's monthly manufacturing cost and other expenses data related to these bicycles are as follows.

1.

Rent on manufacturing equipment (lease cost)

$2,000/month

2.

Insurance on manufacturing building

$750/month

3.

Raw materials (frames, tires, etc.)

$80/bicycle

4.

Utility costs for manufacturing facility

$1,000/month

5.

Supplies for administrative office

$800/month

6.

Wages for assembly line workers in manufacturing facility

$30/bicycle

7.

Depreciation on office equipment

$650/month

8.

Miscellaneous materials (lubricants, solders, etc.)

$1.20/bicycle

9.

Property taxes on manufacturing building

$2,400/year

10.

Manufacturing supervisor's salary

$3,000/month

11.

Advertising for bicycles

$30,000/year

12.

Sales commissions

$10/bicycle

13.

Depreciation on manufacturing building

$1,500/month

Instructions

(a)Prepare an answer sheet with the following column headings.

Product Costs

Cost

Direct

Direct

Manufacturing

Period

Item

Materials

Labor

Overhead

Costs

Enter each cost item on your answer sheet, placing an "X" under the appropriate headings.

(b) Compute total manufacturing costs for the month.

Reference no: EM13513394

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