Part Two Instructions
using a spreadsheet and based on the information provided in the next section, complete the following requirements:
Determine the predetermined overhead rate.
Determine the total number of plastic airplanes to account for.
Prepare an equivalent units schedule. The schedule should follow the format below; you may add additional information if you would like.
Whole Units
|
Equivalent Units
| ||||
(Actual)
|
Direct Materials
Plastic
|
Direct Materials Wheels
|
Conversion Costs
| ||
Beginning
|
XXX
|
XXX
|
XXX
|
XXX
| |
Start/Completed
|
XXX
|
XXX
|
XXX
|
XXX
| |
Completed/Transferred Out
Ending
|
XXX
XXX
|
XXX
XXX
|
XXX
XXX
|
XXX
XXX
| |
Determine the total costs for the plastic and the unit plastic cost for the airplanes.
Determine the total conversion cost and the conversion cost per airplane.
Determine the total equivalent cost per airplane.
Prepare a Cost of Production report. This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods. This process uses FIFO costing.
Determine the amounts for the following. Show calculations for credit.
Ending Work-in-Process Inventory in Units AND Dollars
Ending Finished Goods Inventory in Units AND Dollars
Cost of Goods Sold
Over/Under Applied Manufacturing Overhead
Gross Margin
Tax Amount
Net Income
Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period.
Manufacturing Process Information
Andrew’s Airplanes, a corporation, started a small manufacturing plant that fabricates plastic airplanes. The manufacturing process starts by melting the plastic into a semi-liquid state and then pouring the material into a mold press. The final step of the process is to add the three wheels. The resulting airplanes are then sent to quality control and if the inspection is approved, they are transferred to finished goods. This process is completely automated.
Direct material, Plastic is added 100% at the beginning of the process. Wheels are added 100% at the end of the process.
Conversion costs are added equally throughout the process. Conversion is 25% complete for the ending inventory work in process and the wheels are 0% complete as to ending inventory.
At the beginning of the accounting period, Andrew’s Airplanes estimated that production would be 150,000 units. Our predetermined factory overhead rate is based on an estimated FOH of $30,000. This information is to be used to determine the application rate for overhead.
Estimated and actual direct labor costs totaled $88,775.
Actual factory overhead costs totaled $27,000.
The following information is available concerning direct materials.
Direct Materials-Plastic
Beginning Inventory 0 pounds @ $3.00
Purchase of Plastic 75,000 pounds @ $3.00
Ending Inventory 5,000 pounds @ $3.00
One pound of plastic makes 2 plastic airplanes and the company started 140,000 airplanes.
Direct Materials-Wheels
Beginning Inventory 0 wheels @ .02 per wheel
Purchases 450,000 wheels @ .02 per wheel
The Work-in-Process account has the following information
Beginning Work-in-Process contains 0 airplanes
Ending Work-in-Process contains 10,000 airplanes
The Finished Goods account has the following Information
Beginning Finished Goods contains 0 airplanes
Ending Finished Goods contains 15,000 airplanes
The selling price is $5 per airplane and 115,000 airplanes were sold
Selling and Administrative Costs totaled $130,000
Note: Tax rate is 30 %.
(Round your conversion cost per unit to the nearest cent and everything else to the nearest dollar.)
