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Great Biking Company manufactures a unique model of bicycle helmet. The company began operations January 1, 2020. Its accountant quit one week ago and they
Great Biking Company manufactures a unique model of bicycle helmet. The company began operations January 1, 2020. Its accountant quit one week ago and they are asking for your advice. It is now November 1, 2020 and they are planning for the December 2020 production month. They are anticipating sales of 25,000 bicycle helmets in December 2020 at a selling price of $325 each. They have 7.500 unts in Inventory and at the end of December 2020 they only want to have 2,500 bicycle helmets on hand Each bicycle helmet uses 6 units of direct materials in production at a cost of $15 per unit. Currently there are 15,000 units of direct materials on hand and at the end of December 2020 the company would like to have 25,000 units of direct materials on hand. It takes 3 direct labour hours to produce one helmet at a cost of $2500 per hour Factory overhead is applied at the rate of 80% of the direct labour cost. The following manufacturing expenses are expected to be incurred during December 2020. I Property Taxes - Manufacturing Building 35,500.00 insurance - Manufacturing 25.600.00 Utilities 85,000.00 Machinery Repairs and Maintenance 35,800.00 Manufacturing Building Repairs and Maintenance 25,700.00 25,600.00 Indirect Materials Depreciation on Manufacturing Building Depreciation on Manufacturing Equipment 34,800.00 75,000.00 Supervisor Salanes 57,000.00 a) Prepare a schedule detailing out the unit cost. b) Prepare a budgeted Income Statement
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