Rainy Day Company manufactures a unique umbrella. The company began operations April 1, 2020. Its accountant quit the second week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to each candidate is as follows. Cost Items and Account Balances Administrative salaries $11,250 Advertising 15,250 Cash, April 1 0 Depreciation on factory building 1,500 Depreciation on office equipment 800 Insurance on factory building 1,500 Miscellaneous expensesfactory 1,000 Office supplies expense 300 Professional fees 500 Property taxes on factory building 400 Raw materials used 70,000 Rent on production equipment 6,000 Research and development 10,000 Sales commissions 40,000 Utility costsfactory 900 Wagesfactory 70,000 Work in process, April 1 0 Work in process, April 30 0 Raw materials inventory, April 1 0 Raw materials inventory, April 30 0 Raw material purchases 70,000 Finished goods inventory, April 1 0

Production and Sales Data

Number of umbrellas produced 10,000

Expected sales in units for April

($40 unit sales price) 8,000

Expected sales in units for May 10,000

Desired ending inventory 20% of next months sales

Direct materials per finished unit 1 kilogram

Direct materials cost $7 per kilogram

Direct labor hours per unit .35

Direct labor hourly rate $20

Cash Flow Data

Cash collections from customers: 75% in month of sale and 25% the following month.

Cash payments to suppliers: 75% in month of purchase and 25% the following month.

Income tax rate: 45%.

Cost of proposed production equipment: $720,000.

Manufacturing overhead and selling and administrative costs are paid as incurred.

Desired ending cash balance: $30,000.

Instructions Using all the data presented above, do the following. 1. Classify the costs as either product costs or period costs using a five-column table as shown below. Enter the dollar amount of each cost in the appropriate column and total each classification. Direct Materials Product Costs Direct Manufacturing Labor Overhead Period Costs Item 2. Classify the costs as either variable or fixed costs. Assume there are no mixed costs. Enter the dollar amount of each cost in the appropriate column and total each classification. Use the format shown below. Assume that Utility costs-factory are a fixed cost and Miscellaneous expenses - factor are a variable cost. Variable Costs Fixed Costs Total Costs Item Instructions Using all the data presented above, do the following. 1. Classify the costs as either product costs or period costs using a five-column table as shown below. Enter the dollar amount of each cost in the appropriate column and total each classification. Direct Materials Product Costs Direct Manufacturing Labor Overhead Period Costs Item 2. Classify the costs as either variable or fixed costs. Assume there are no mixed costs. Enter the dollar amount of each cost in the appropriate column and total each classification. Use the format shown below. Assume that Utility costs-factory are a fixed cost and Miscellaneous expenses - factor are a variable cost. Variable Costs Fixed Costs Total Costs Item