Devin Biek and Richard Worsham began building custom mopeds in 2017 in Elkhart, Indiana, but actually realized profit from exhaust pipes that unlocked extra sound and power from the mopeds. With those profits, they designed and manufactured a 50cc motorcycle they called the Janus. By 2019 Janus Motorcycles was making three separate models all powered by a larger 229cc single-cylinder motor.

Due to costs related to federal regulations, it's cheaper to buy the engine and electronics from China, but the rest of the parts are made locally by Amish craftsmen. It's against Amish beliefs to ride a motorcycle and to connect to the public power grid, but the Amish are fine craftsmen and have a long history of being blacksmiths and carriage builders since the dawn of the motor vehicle. One Amish family uses a generator, located beside the chicken coop in an oversized garage, to build the bike's aluminum and steel skeleton. Another family cuts the leather for the saddles, by hand, in a one-room shop heated by a wood stove. Another family machines fine parts on decades-old analog equipment. The finished pieces are brought to the shop, where a small assembly team turns 150 to 200 parts into a finished bike.

The final assembly is done by two workers on a simple stand in the middle of the shop floor. Once assembled, each bike is taken for a quick spin along the local country lanes (except in winter, when a dry run through the speeds in the shop suffices) before the machine is handed off to its new owner.

In 2018, the company sold 160 motorcycles. Worsham and Biek estimate that their facility and current network of suppliers support a production run of 500 a year and that the company will rise above the break-even point when they reach 250 motorcycles, which equates to revenues of just under $2 million.

Sources:

https://www.gearpatrol.com/cars/motorcycles/a636106/janus-motorcycles-handmade-250-cc-bikes-amish-made-indiana/

https://www.rideapart.com/news/480210/janus-motorcycles-building-new-bikes-old-way/

Also, see:

https://janusmotorcycles.com/motorcycles/

https://youtu.be/gcVNtS-1QXg

https://youtu.be/75sKSoli1I0

Using the information provided, answer the following questions about Janus Motorcycles:

1- If you were the cost accountant for Janus Motorcycles, what kinds of cost accounting issues would you be looking at?

2- What are the direct costs?

3- What are the indirect costs and the cost drivers?

4- How would you allocate both direct and indirect costs? What are the pros and cons of the different methods that you might suggest?

5- What kinds of differences do you see between accounting for mass-produced products like purses and hand-crafted products built-to-order like Janus motorcycles?

Answer rating: 100% (QA)

Answer 1 As the cost accountant for Janus Motorcycles I would be looking at the following cost accounting issues a Material costs Identifying the costs of the engine electronics and other components s... View the full answer