Reference no: EM13610977

Copa Company, a manufacturer of stereo systems, started itsproduction in October 2008. For the preceding 3 years Copa had beena retailer of stereo systems. After a thorough survey of stereosystem markets, Copa decided to turn its retail store into a stereoequipment factory. Raw materials cost for a stereosystem will total $74 per unit. Workers on the production lines areon average paid $12 per hour. A stereo system usually takes 5 hoursto complete. In addition, the rent on the equipment used toassemble stereo systems amounts to $4,900 per month. Indirectmaterials cost $5 per system. A supervisor was hired to overseeproduction; her monthly salary is $3,000.

Janitorial costs are $1,300monthly. Advertising costs for the stereo system will be $8,500 permonth. The factory building depreciation expense is $7,200 peryear. Property taxes on the factory building will be $9,000 peryear.Assuming that Copa manufactures, on average, 1,300 stereosystems per month, Compute the cost to produce one stereosystem?

Rent=4,900
supervisor=3,000
janitoral=1,300
advertising=8,500
depreciation = 7,200
property tax = 9,000
total = 33,900/1,300 units per month = 26.o8 per unit
raw material =74.00
worker 12/hr @ 5 hrs per unit = 60.00
total cost per unit = 160.00