Singular Saw Corporation Assembles Circular Saws by Purchasing Bolts, Clamps

Singular Saw Corporation assembles circular saws by purchasing bolts, clamps, and other parts from various suppliers.
Consider the following data:
▪ The company plans to sell 50,000 saws during each month of the year's first quarter.
▪ A review of the accounting records disclosed a finished-goods inventory of 2,400 saws on January 1 and an expected finished-goods inventory of 3,000 saws on January 31.
▪ Singular has 5,000 bolts in inventory on January 1, a level that is expected to drop by 6% at month-end.
▪ Assembly time totals 30 minutes per saw, and workers are paid $20 per hour.
▪ Singular accounts for employee benefits as a component of direct labour cost. Pension and insurance costs average $4 per hour (total); additionally, the company pays Payroll taxes that amount to 6% of gross wages earned.
Required:
A. How many saws does Singular expect to produce (i.e., assemble) in January?
B. How many bolts must be purchased to satisfy production needs?
C. Compute Singular's total direct labour cost.
D. Explain how the company's purchasing activity would affect the end-of-period balance sheet.

Correct Answer:

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A. Finished-goods inventory is expected ...

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