Livestrong Bicycle Company manufactures a top-of-the-line road bike. The company began operations on December 1, 2013. Its accountant quit in the third week of operations, and the company is searching for a replacement. The company has decided to test the knowledge and ability of all candidates interviewing for the position. Each candidate will be provided with the information below and then asked to prepare a series of reports, schedules, budgets, and recommendations based on that information. The information provided to each candidate is as follows:
Cost Items and Account Balances:
- Administrative salaries-office: $16,500
- Advertising for helmets: $12,500
- Cash, December 1: $1,200
- Depreciation on factory building: $550
- Depreciation on office equipment: $1,250
- Insurance on factory building: $600
- Miscellaneous expenses-factory: $900
- Office supplies expense: $1,100
- Professional fees: $1,350
Raw materials used: $65,000
Rent on production equipment: $7,000
Research and development: $10,000
Sales commissions: $50,000
Utility cost-factory: $1,600
Wages-factory (direct): $42,000
Work in process, December 31: $65,000
Materials inventory, December 31: $1,600
Materials purchases: $42,000
