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    Cannondale bikes

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    Cannondale bikes manufactures a basic road bicycle. Production and sales data
    for the most recent year are as follows(no beginning inventory):

    Variable production costs $90 per bike
    Fixed production costs $450,000
    Variable selling & administrative costs $22 per bike
    Fixed selling & administrative costs $500,000
    Selling Price $200 per bike
    Production 20,000 bikes
    Sales 17,000 bikes

    (a) Prepare a brief income statement using variable costing.
    (b) Compute the amount to be reported for inventory in the year end variable
    costing balance sheet.

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