Question

Check my wol Cycle Business manufactures and sells road and mountain bikes through a network of retail outlets in western Canada. Below is a partial list of expense items incurred in the most recent month (November), when 1,110 bicycles were manufactured, shipped, and sold. There was no beginning or ending work in process or finished goods inventory in November: Item Units produced and sold October 1.010 November 1, 110 Sales Leather used for the bicycle seats Production manager's salary Life insurance for the company president Electricity used in the production facilities Sales commissions Internet advertising Employee benefits for the production workerst Property taxes on the production facilities Shipping costs Salary of the chief financial officer $1,010,000 31,310 6.550 255 2,175 46, 100 1,200 40.400 1,550 46, 100 11,100 $1,110,000 34,410 6,550 255 2,375 51,320 1,200 44.400 1.550 51.320 11,100 Each month, regardless of how much electricity is used, Cycle Business pays a $155 base charge to the utilities company. Employee benefits total 200 of the vages paid to production workers, who on average earn $20 per hour. Each bicyele requires 10 hours of direct labour. Required: 1. With respect to the partial list of November expenses: < Prev 1 of 4 !!! Next >

Answer 1

Cycle Business Requirement 1 Direct/Indirect Behaviour Item Type Leather used for the bicycle seats Production manager's salary Variable Manufacturing Direct Manufacturing Fixed Indirect Life insurance for the company president Administrative Variable/fixed Manufacturing Electricity used in the production facilities Indirect Sales commissions Selling Internet advertising Selling Manufacturing Employee benefits for the production workers Variable Indirect Property taxes on the production facilities Shipping costs Salary of the chief financial officer Fixed Manufacturing Indirect Administrative Administrative There is a fixed and variable component to this cost. The base charge of $155 represents a fixed cost with the remainder varying with the level of production activity. Requirement 2 Unit costs for variable manufacturing expenses based on November (October) amounts: Leather used in seats: $34,410 ($31,310) - 1,110 (1,010) = $31/bike Electricity: $2,220* ($2,020*) ÷ 1,110 (1,010) = $2/bike Employee benefits: $44,400 ($40,400) + 1,110 (1,010) = $40/bike *$2,375 ($2,175) - $155 basic charge = $2,220 ($2,020). December manufacturing costs: Per unit Amount Activity Item Cost Leather in seats (variable) 31 1310 40610 Electricity (variable) 1310 2620 Employee benefits (variable) 40 1310 52400 Production manager's salary (fixed) n/a 1310 6550 n/a Electricity (fixed) 1310 155 Property taxes (fixed) n/a 1550 1310