Problem: Cannondale bikes manufactures a basic road bicycle. Production and sales data for the most recent year are as follows (no beginning inventory):
| Variable production costs |
|
|
$90 per bike |
| Fixed production costs |
|
|
$450,000 |
|
| Variable selling & administrative costs |
$22 per bike |
| Fixed selling & administrative costs |
|
$500,000 |
|
| Selling Price |
|
|
|
$200 per bike |
| Production |
|
|
|
20,000 bikes |
| Sales |
|
|
|
|
17,000 bikes |
|
|
|
|
|
|
|
Instuctions:
Q1. Prepare a brief income statement using variable costing.
Q2. Compute the amount to be reported for inventory in the year end variable costing balance sheet.