Atlantis Corporation Assembles Bicycles by Purchasing Frames, Wheels, and Other

question 82

Essay

Atlantis 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.
• Atlantis 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.
• Atlantis 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 Atlantis expect to produce (i.e., assemble) in January?
B. How many wheels are budgeted to be purchased in January?
C. Compute Atlantis'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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Definitions:

Mohenjo-daro

An archaeological site in the province of Sindh, Pakistan, representing one of the largest settlements of the ancient Indus Valley Civilization.

Kanishka

An emperor of the Kushan dynasty, renowned for his military, political, and spiritual achievements, and known for his patronage of Buddhism.

Hellenistic

Refers to the period and culture of the Mediterranean world and Near East from the death of Alexander the Great in 323 BC to the Roman conquest of Egypt in 30 BC, noted for the spread of Greek culture and influence.

Kushan Dynasty

An empire in ancient Asia, established by the Kushans, that played a crucial role in cultural exchanges between the East and West, particularly in spreading Buddhism.