Racing Bikes, Inc., produces custom bicycles for professional racers. Each bike is built to customer specifications....

 

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Racing Bikes, Inc., produces custom bicycles for professional racers. Each bike is built to customer specifications. During July, its first month of operations, Racing Bikes began production of four customer orders-jobs 1 through 4. The following transactions occurred during July. • Purchased bike parts totalling $14,400 • Processed material requisitions for the following items: Job 1, direct materials Job 2, direct materials Job 3, direct materials Job 4, direct materials Indirect materials Total 52.800 1,250 1,550 780 1,075 57.455 • Processed timesheets showing the following: Job 1, direct labor (30 hours) Job 2, direct labor (25 hours) Job 3, direct labor (28 hours) Job 4, direct labor (15 hours) Indirect labor Total S 500 430 465 210 985 $ 2.590 Applied overhead using a predetermined rate of $30 per direct labour hour • Completed and transferred to finished goods jobs 1, 2, and 3 • Delivered jobs 1 and 2 to customers, billing them $6,000 for job 1 and $3,500 (a) (b) Calculate the production costs incurred in July for each of the four jobs Make the appropriate journal entry for each transaction described previously. Assume all payments will be made next month. How much gross profit did Racing Bikes, Inc., earn from the sale of job 2? (c) Racing Bikes, Inc., produces custom bicycles for professional racers. Each bike is built to customer specifications. During July, its first month of operations, Racing Bikes began production of four customer orders-jobs 1 through 4. The following transactions occurred during July. • Purchased bike parts totalling $14,400 • Processed material requisitions for the following items: Job 1, direct materials Job 2, direct materials Job 3, direct materials Job 4, direct materials Indirect materials Total 52.800 1,250 1,550 780 1,075 57.455 • Processed timesheets showing the following: Job 1, direct labor (30 hours) Job 2, direct labor (25 hours) Job 3, direct labor (28 hours) Job 4, direct labor (15 hours) Indirect labor Total S 500 430 465 210 985 $ 2.590 Applied overhead using a predetermined rate of $30 per direct labour hour • Completed and transferred to finished goods jobs 1, 2, and 3 • Delivered jobs 1 and 2 to customers, billing them $6,000 for job 1 and $3,500 (a) (b) Calculate the production costs incurred in July for each of the four jobs Make the appropriate journal entry for each transaction described previously. Assume all payments will be made next month. How much gross profit did Racing Bikes, Inc., earn from the sale of job 2? (c)

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Answer Solution Finished goods total cost of job 1job 2job 3 cost of go... View the full answer