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GTEX Company, a manufacturer of tennis rackets, started production in September 2015. For the preceding 5 years GTEX had been a retailer of sports equipment. After a thorough survey of tennis racket markets, GTEX decided to turn its retail store into a tennis racket factory. Raw materials cost for a tennis racket will total RM60 per racket. Workers on the production lines are paid on average RM30 per hour. A racket usually takes 3 hours to complete. In addition, the rent on the equipment used to produce rackets amount to RM6,000 per month. Indirect materials cost RM24 per racket. A supervisor was hired to oversee production: his monthly salary is RM10,400. Janitorial costs are RM4,200 monthly. Advertising costs for the racket will be RM14,000 per month. The factory building depreciation expense is RM 24,000 per year. Property taxes on the factory building will be RM4,800 per year. Required: (a) Prepare an answer sheet with the following column headings. Cost Item Product Costs Period Prime Conver- Direct Direct Manufact- Costs Costs sion Materials Labor uring Costs Overheads Assuming that Venus manufacturers, on average 10,000 tennis rackets per month, enter each cost on your answer sheet, placing the ringgit amount per month under the appropriate headings. Total the ringgit amounts in each of the columns. (b) Compute the cost to produce one racket.

GTEX Company, a manufacturer of tennis rackets, started production in September 2015. For the preceding 5 years GTEX had been a retailer of sports equipment. After a thorough survey of tennis racket markets, GTEX decided to turn its retail store into a tennis racket factory. Raw materials cost for a tennis racket will total RM60 per racket. Workers on the production lines are paid on average RM30 per hour. A racket usually takes 3 hours to complete. In addition, the rent on the equipment used to produce rackets amount to RM6,000 per month. Indirect materials cost RM24 per racket. A supervisor was hired to oversee production: his monthly salary is RM10,400. Janitorial costs are RM4,200 monthly. Advertising costs for the racket will be RM14,000 per month. The factory building depreciation expense is RM 24,000 per year. Property taxes on the factory building will be RM4,800 per year. Required: (a) Prepare an answer sheet with the following column headings. Cost Item Product Costs Period Prime Conver- Direct Direct Manufact- Costs Costs sion Materials Labor uring Costs Overheads Assuming that Venus manufacturers, on average 10,000 tennis rackets per month, enter each cost on your answer sheet, placing the ringgit amount per month under the appropriate headings. Total the ringgit amounts in each of the columns. (b) Compute the cost to produce one racket.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 40P: Olin Company manufactures and distributes carpentry tools. Production of the tools is in the mature...
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Question 1 GTEX Company, a manufacturer of tennis rackets, started production in September 2015. For the preceding 5 years GTEX had been a retailer of sports equipment. After a thorough survey of tennis racket markets, GTEX decided to turn its retail store into a tennis racket factory. Raw materials cost for a tennis racket will total RM60 per racket. Workers on the production lines are paid on average RM30 per hour. A racket usually takes 3 hours to complete. In addition, the rent on the equipment used to produce rackets amount to RM6,000 per month. Indirect materials cost RM24 per racket. A supervisor was hired to oversee production: his monthly salary is RM10,400. Janitorial costs are RM4,200 monthly. Advertising costs for the racket will be RM14,000 per month. The factory building depreciation expense is RM 24,000 per year. Property taxes on the factory building will be RM4,800 per year. Required: (a) Prepare an answer sheet with the following column headings. Product Costs Direct Manufact- Cost Item Period Prime Conver- Direct Costs Costs sion Materials Labor uring Costs Overheads Assuming that Venus manufacturers, on average 10,000 tennis rackets per month, enter each cost on your answer sheet, placing the ringgit amount per month under the appropriate headings. Total the ringgit amounts in each of the columns. (b) Compute the cost to produce one racket.
Transcribed Image Text:Question 1 GTEX Company, a manufacturer of tennis rackets, started production in September 2015. For the preceding 5 years GTEX had been a retailer of sports equipment. After a thorough survey of tennis racket markets, GTEX decided to turn its retail store into a tennis racket factory. Raw materials cost for a tennis racket will total RM60 per racket. Workers on the production lines are paid on average RM30 per hour. A racket usually takes 3 hours to complete. In addition, the rent on the equipment used to produce rackets amount to RM6,000 per month. Indirect materials cost RM24 per racket. A supervisor was hired to oversee production: his monthly salary is RM10,400. Janitorial costs are RM4,200 monthly. Advertising costs for the racket will be RM14,000 per month. The factory building depreciation expense is RM 24,000 per year. Property taxes on the factory building will be RM4,800 per year. Required: (a) Prepare an answer sheet with the following column headings. Product Costs Direct Manufact- Cost Item Period Prime Conver- Direct Costs Costs sion Materials Labor uring Costs Overheads Assuming that Venus manufacturers, on average 10,000 tennis rackets per month, enter each cost on your answer sheet, placing the ringgit amount per month under the appropriate headings. Total the ringgit amounts in each of the columns. (b) Compute the cost to produce one racket.
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