a bicycle manufacturer incurred the following costs in July

a bicycle manufacturer incurred the following costs in July to manufacture 1,000 units of bicycles:

Direct Materials: $20,000

Direct labor: $5,000

Manufacturing overhead: $15,000

Selling Costs: $20,000

Administrative costs: $10,000

In July, the firm sold 800 bicycles at $100 each.

a. Calculate the inventory cost per bike.

b. Calculate net income (loss) in July.

Please show steps by steps.

Solution

a) Direct material 20000 Direct labor 5000 Maufacturing overheads 15000 Total product cost 40000 Number of bikes manufactured 1000 Cost per bike 40 b) Income statement Sales revenue 800*100 80000 Less Cost of goods sold 40*800 32000 Gross profit 48000 Operating expense Administrative cost 10000 Selling cost 20000 Total operating expense 30000 Net income 18000