Par Play Company, a manufacturer of driver golf clubs, started production in November 2010. For the preceding five years, Par Play had been a retailer of sports equipment. After a thorough survey of driver golf club markets, Par Play decided to turn its retail store into a driver golf club factory.

Raw materials cost for a driver will total $24 per driver. Workers on the production lines are paid on average $13 per hour. A driver usually takes two hours to complete. In addition, the rent on the equipment used to produce drivers amounts to $1,500 per month. Indirect materials cost $3 per driver. A supervisor was hired to oversee production; her monthly salary is $3,500.

Janitorial costs are $1,400 monthly. Advertising costs for the drivers will be $6,000 per month. Th e factory building depreciation expense is $9,600 per year. Property taxes on the factory building will be $7,200 per year.

Instructions

(a) Prepare an answer sheet with the following column headings.

(a) Assuming that Par Play manufactures, on average, 2,500 drivers 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.
(b) Calculate the cost to produce one driver.

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Product Costs Direct Materials Direct Labour Manufacturing Overhead Period Costs Cost Item