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Problem 5-3 Pedals R Us is a small manufacturer of mountain bicycles. The bikes sell for $500 each. The variable costs of each unit include
Problem 5-3 Pedals R Us is a small manufacturer of mountain bicycles. The bikes sell for $500 each. The variable costs of each unit include the following: Direct materials Direct labor Variable manufacturing overhead $130 150 60 In addition, $450,000 of fixed overhead is incurred in each period. Selling and administrative costs are fixed costs that total $135,000 and $225,000 respectively. On January 1, 2017, there was no beginning inventory of finished goods. During the year 15,000 bikes were produced. At the end of the year there were 5,000 bikes in ending inventory. 1. Assuming Pedals Are Us uses full costing, what is the unit cost for one bicycle? 370 Assuming Pedals Are Us uses variable costing, what is the unit cost for one bicycle? $340 Prepare an income statement for Pedals Are Us using full costing $440,000 Prepare an income statement for Pedals Are Us using variable costing. $790,000 2. 3. 4
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