Al-Noor Corporation assembles bicycles by purchasing frames, wheels, and other parts from various suppliers. Consider the...
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Al-Noor Corporation assembles bicycles by purchasing frames, wheels, and other parts from various suppliers. Consider the following data: • The company plans to sell 25,000 bicycles during each month of the year's first quarter. • A review of the accounting records disclosed a finished-goods inventory of 1,400 bicycles on January 1 and an expected finished-goods inventory of 1,850 bicycles on January 31. • Al-Noor has 4,300 wheels in inventory on January 1, a level that is expected to drop by 5% at month-end. • Assembly time totals 30 minutes per bicycle, and workers are paid $14 per hour. • Al-Noor accounts for employee benefits as a component of direct labor cost. Pension and insurance costs average $2 per hour (total); additionally, the company pays Social Security taxes that amount to 8% of gross wages earned. Required: A. How many bicycles does Al-Noor expect to produce (i.e., assemble) in January? B. How many wheels are budgeted to be purchased in January? C. Compute Al-Noor's total direct labor cost for January. D. Briefly explain how the company's purchasing activity would affect the end-of-period balance sheet. Al-Noor Corporation assembles bicycles by purchasing frames, wheels, and other parts from various suppliers. Consider the following data: • The company plans to sell 25,000 bicycles during each month of the year's first quarter. • A review of the accounting records disclosed a finished-goods inventory of 1,400 bicycles on January 1 and an expected finished-goods inventory of 1,850 bicycles on January 31. • Al-Noor has 4,300 wheels in inventory on January 1, a level that is expected to drop by 5% at month-end. • Assembly time totals 30 minutes per bicycle, and workers are paid $14 per hour. • Al-Noor accounts for employee benefits as a component of direct labor cost. Pension and insurance costs average $2 per hour (total); additionally, the company pays Social Security taxes that amount to 8% of gross wages earned. Required: A. How many bicycles does Al-Noor expect to produce (i.e., assemble) in January? B. How many wheels are budgeted to be purchased in January? C. Compute Al-Noor's total direct labor cost for January. D. Briefly explain how the company's purchasing activity would affect the end-of-period balance sheet.
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Related Book For
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura
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