Devini bicycles have been a guarantee of quality for a very long time. The Quebec-based company manufactures and distributes its bicycles to several retailers across the country. The management has met with the various departments of the company to plan the operations for the next fiscal year. Here is a summary of the various meetings regarding the The following is a summary of the various meetings regarding the data for the fiscal year ended June 30, 20X1 and the forecasts for the next fiscal year. Production Department Devini manufactures only one model of bicycle, the "High Performance Hybrid". Its It requires 4 kg of aluminum and 0.5 kg of carbon alloy for the frame. The The frame is manufactured using very complex, specific and fully automated equipment. automated equipment. The total manufacturing overhead for the operation of the equipment was equipment amounted to $3.2 million (70% fixed and 30% variable) and have been relatively stable for several years. The remaining parts are already assembled at the time of purchase and are manually attached to the bike frame by by technicians. The cost of the remaining parts totals $106 per bike. On average, a technician can assemble five bikes in one work day. Since Devini Bikes manufactures its bikes to order, the value of its inventory is negligible at June 30, 20X. negligible at June 30, 20X1. Purchasing Department The president of the company insists that raw materials be purchased locally. For example, all aluminum comes from the Olca aluminum smelter located in Quebec. During the last fiscal year, the average market price of aluminum was 2.50/kg. After the current economic downturn, experts predict that the recovery will result in higher recovery will result in an unprecedented increase in aluminum prices in the territory. Local aluminum prices are expected to reach $4/kg for the next few years. The price of carbon alloy has been stable for several years at $150/kg, and prices for other parts are expected to remain stable. prices for other parts are expected to remain stable as well. Sales Department Bicycles are an increasingly popular mode of transportation and are growing in popularity. The sales volume for the next fiscal year is expected to increase by 15%. However, as the competition competition, the selling price is expected to drop by $50 to $450 per bike. bike. In addition, advertising campaigns will have to be more aggressive and an additional fixed annual amount of In addition, advertising campaigns will need to be more aggressive and an additional fixed annual amount of $150,000 will be allocated to the contract already signed. The commission as a percentage of the sale price will not change. The current administration fees are all fixed and will not change over the next few years. years. Human Resources Department Technicians are paid at a rate of $25 per hour and work 7 hours per day. The collective agreement will be renewed in the next fiscal year and it is expected that the hourly rate will increase by 4%. hourly rate is expected to increase by 4%. One employee is responsible for the supervision of the machines. He He works full time for an annual salary of $65,000 and his salary will not change in the His salary will not change in the next fiscal year. The Devini Corporation Statement of Operations For the year ended June 30, 20X1 Sales $20,000,000 Cost of sales (12,305,000) Gross profit $ 7,695,000 Selling and administrative expenses Commission $1,000,000 Advertising $500,000 Administration 2,148,000 (3,648,000) Net Income $4,047,000 Work to be done: 1) Identify the items that are part of raw materials, direct labor, variable manufacturing overhead, and variable selling and administrative expenses and calculate the unit cost per unit of each for the year ended June 30, 20X1, and the projected costs for the following year. (Show all your calculations) 9 pts 2) What will be the projected breakeven point (in units and in sales dollars) for Devini Company for the year ending June 30, 20X2? 3 pts 3) What will be the expected margin of safety (in units and sales dollars) for year ending June 30, 20X2? 2 pts 4) Write the projected income statement for the year ending June 30, 20X2 using the full cost and variable cost methods. Note that the beginning inventory of finished goods and ending inventory of finished goods are zero. 15 pts