Question

Bell Company, a manufacturer of audio systems, started its production in October 2017. 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 materials cost for an audio system will total $75 per unit. Workers on the production lines are on average paid $14 per hour. An audio system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to $5,110 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,730.Factory janitorial costs are $1,550 monthly. Advertising costs for the audio system will be $9,290 per month. The factory building depreciation expense is $6,600 per year. Property taxes on the factory building will be $8,760 per year.Compute the cost to produce one audio system. (Round answer to 2 decimal places, e.g. 15.25.)

Answer 1

Answer:

variable cost per unit 150 dollars

Explanation:

As we aren't provided with a volume. We calculate considering variable costying system which onyl count variable cost as cost of goods manufactured:

raw material                            $    75 per unit

labor 5 hours x 14 per hour = $    70 per unit

variable ovehread                   $     5 per unit

Variable cost per unit              $  150 per unit

the fixed overhead cost

5,110 + 3,730 + 1,550 + 6,600 + 8,760 = 25,750

will be considered cost of the period under variable costing