Q 3 Hamdard Manufacturer Company, a manufacturer of radio, started its production in month of May 2019.

Raw materials cost for a radio will total $85 per unit. Workers on the production lines are on average paid $15 per hour. A phone usually takes 6 hours to complete.

In addition, the rent on the equipment used to assemble radio amounts to $8000 per month. Indirect materials cost $4 per phone. A supervisor was hired to oversee production; her monthly salary is $5,500. Factory Cleaning costs are $1,500 monthly.

Advertising costs to sell phones will be 18,500 per month. The factory building depreciation expense is $2,400 per annum. Property taxes on the factory building will be $10800 per year. Depreciation of the office building is $900 per month.

Hamdard manufactures Company, on average, 1250 radio per month,

Instructions:

a) Prepare an answer sheet with the following column headings for Product and Period cost.

(4marks)

b) Compute the cost to produce one phone.(1marks)

Cost items

Product cost

Period Cost

Direct Material

Direct Labor

Manufacturing Overheads