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 Costs | ||||
| Cost | Direct | Direct | Manufacturing | Period |
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