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
$77
per unit. Workers on the production lines are paid
$13
per hour. An audio system takes 6 labor hours to complete. In addition, the rent on the equipment used to assemble audio systems amounts to
$5,070
per month. Indirect materials cost
$5
per system. A supervisor was hired to oversee production; her monthly salary is
$3,700
. Factory janitorial costs are
$2,030
monthly. Advertising costs for the audio system will be
$9,030
per month. The factory building depreciation is
$6,360
per year. Property taxes on the factory building will be
$8,520
per year.