Stanley Cycle

963 words 4 pages
Stanley Cycle Company

Julia Mackenzie, Colin Robinson,
Jason Monaghan and Justin Corby
Managerial Accounting I
For Winston Marcellin

George Brown College
April 11, 2012 1. Introduction to Stanley Cycle

Stanley Cycle Company is a motorcycle manufacturer that deals with two subassembly lines. Their two lines are JY-63 and RX-67. The two lines are both mechanically complex, and require machining, assembly and inspection.

Stanley receives raw materials to be used in the production of these two items, and uses a First-In, First-Out inventory system. They are currently using a traditional costing method for the two products, which applies overhead based on a single cost driver. In Stanley’s case, the cost driver is
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Direct labor: | | | Direct labor x 1.08 cost increase | $400,000 | $200,000 | Material handling: | | | # of Parts x units x cost | $40,000 | $80,000 | Inspection: | | | Hours x $20/hour | $100,000 | $150,000 | Machining: | | | Hours x $20/hour | $300,000 | $600,000 | Assembly: | | | Hours x $40/hour | $240,000 | $220,000 | | | | Total cost | | | | $3,080,000 | $4,750,000 | IV)

Stanley Cycle Company
Budgeted Statement of Gross Margin for 20x5 | | JY-63 | RX-67 | Total | Sales | $3,621,000 | $4,459,000 | $8,080,000 | COGM + Sold | | | | Beginning inventory | $480,000 | $600,000 | $1,080,000 | Add: | Direct material | 2,000,000 | 3,500,000 | 5,500,000 | | Direct labor | 400,000 | 200,000 | 600,000 | | Material handling | 40,000 | 80,000 | 120,000 | | Inspection | 100,000 | 150,000 | 250,000 | | Machining | 300,000 | 600,000 | 900,000 | | Assembly | 240,000 | 220,000 | 460,000 | COGS | $3,560,000

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