Question
Elliott Company, a manufacturer of tennis rackets, started production in November 2017. For the preceding 5 years, Elliott had been a retailer of sports equipment.
Elliott Company, a manufacturer of tennis rackets, started production in November 2017. For the preceding 5 years, Elliott had been a retailer of sports equipment. After a thorough survey of tennis racket markets, Elliott decided to turn its retail store into a tennis racket factory.
Raw materials cost for a tennis racket will total $23 per racket. Workers on the production lines are paid on average $15 per hour. A racket usually takes 2 hours to complete. In addition, the rent on the equipment used to produce rackets amounts to $1,300 per month. Indirect materials cost $3 per racket. A supervisor was hired to oversee production; her monthly salary is $3,500.
Factory Janitorial costs are $1,400 monthly. Advertising costs for the rackets will be $8,000 per month. The factory building depreciation expense is $8,400 per year. Property taxes on the factory building will be $9,600 per year.
Assuming that Elliott manufactures, on average, 2,500 tennis rackets per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.
Product Costs | ||||
Direct Materials | Direct Labor | Mfg Overhead | Period Costs | |
Raw Materials (1) | ||||
Wages for Workers (2) | ||||
Rent on Equipment | ||||
Indirect Materials (3) | ||||
Factory Supervisors Salary | ||||
Janitorial Costs | ||||
Advertising | ||||
Depreciation on Factory Bldg. (4) | ||||
Property Taxes on Factory Bldg. (5) | ||||
Column Totals | 15,200 |
SHOW your calculations to arrive at amounts above that correlate to the left column numbers.
1)
2)
3)
4)
5)
Total Production Costs: List each of the 3 cost categories and there amounts | |
Total Production Costs |
Production Cost Per Racket: |
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