Question
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw material costs for an audio system will total $76 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 6 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,400 per month. Indirect materials cost $7 per system. A supervisor was hired to oversee production; her monthly salary is $3,300. Factory janitorial costs are $1,500 monthly. Advertising costs for the audio system will be $9,200 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $8,400 per year.
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