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Badbug makes Viral Memes which sell for Sl ,OOO each. The production process is fairly simple and involves tweaking components purchased from various suppliers.
Badbug makes Viral Memes which sell for Sl ,OOO each. The production process is fairly simple and involves tweaking components purchased from various suppliers. Since each Viral Meme only takes one hour to assemble, there is essentially no work-in-process inventory. Badbug has the capacity to make 2,000 Viral Memes per year. Costs for the Viral Meme components are: Primary GIF Secondary GIF JPEGs $100 20 10 Each meme should take one hour of direct labor to tweak. Direct labor wages are $150 per hour. Other manufacturing-costs on a m.Qn!hlLbasis are: Factory Rent Factory Insurance Factory Utilities Factory Miscellaneous $1,000 5,000 200 300 Inventory balances are as follows (Badbug uses the FIFO inventory cost flow assumption): Primary GIFs Secondary GIFs JPEGs Finished Viral Memes 1/1 /2020 12/31 /2020 1/1 /2020 12/31 /2020 1/1 /2020 12/31 /2020 1/1 /2020 12/31 /2020 Units 300 290 600 580 900 870 300 290 Dollars $30,000 < Budgeted $12,000 < Budgeted $9,000 < Budgeted $107,400 < Budgeted
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