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: 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:
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
