Teal Mountain Company has been a retailer of audio systems for the past 3 years. However, after a thorough survey of audio system markets, Teal Mountain decided to turn its retail store into an audio equipment factory. Production began October 1, 2025. Direct materials costs for an audio system total
$77per unit. Workers on the production lines are paid
$13per hour. An audio system takes 6 labor hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to
$5,070per month. Indirect materials cost
$5per system. A supervisor was hired to oversee production; her monthly salary is
$3,700. Factory janitorial costs are
$2,030monthly. Advertising costs for the audio system will be
$9,030per month. The factory building depreciation is
$6,360per year. Property taxes on the factory building will be
$8,520per year.