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A local manufacturing firm BlueSky Ltd makes a single product. In the first 2 months of 2022 it made 32,150 units of product in a single production run. During January it sold 8850 units and in February it sold 7700 units (from the production run above) the selling price per unit was $32.50. The variable rate for raw materials was $3.90 per unit and the cost of labour was $15.20 per unit. The predetermined overhead allocation rate was $30.50 per machine hour based on budgeted usage of running the machines for 5 days a week, 8 hours a day over the eight-week period. Actual machine hours were equal to budgeted. Period costs related to the combined period of January and February were as follows:

Selling expenses $42,500

Interest expense $13,260

Administrative costs $22,550

1. Calculate the product cost. Show all workings and round to 2 dp.
2. Show profit for the combined period of January and February 2022. Ensure that you show gross profit, EBIT and net profit in your answer (following the format as shown in lectures) assume no tax.
3. What is the value of finished good inventory on the balance sheet (from the above production run) at the end of February?
4. If one of the machines broke down, and stopped for 2 days during January, what would have been the impact to overhead? Explain fully.

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