questions 5-8

CCOUNTING OCTETY Part Two Instructions Using a spreadsheet and based on the information provided in the next section, complete the following requirements 1 Determine the started and completed units by using the following formula: Started-Ending Completed and Transferred Out-Beginning 2 Prepare an equivalent units schedule. The schedule should follow the format below; you may add additional information if you would like, (Remember that the schedule is for units of trucks not plastic and wheels.) Whole Equivalent Units Units (Actual) Direct Materials- Direct Materials- Conversion Plastic Wheels Costs Beginning Start/Completed Completed/Transferred Out Ending Total XXX XXX XXX XXX XXx XXX XXX XXX XXX XXX XXX XXX Calculate the total cost and the cost per equivalent unit for the direct materials plastic Calculate the total cost and the cost per equivalent unit for the direct materials wheels 3. 4. Calculate the predetermined overhead rate. 5 6 Determine the total conversion cost by using the predetermined rate and the direct labor rate. Then determine the conversion cost per truck Determine the unit cost per truck. 8. Prepare a Cost of Production report. This report should show all costs transferred into Work-in- 7. Process and the costs transferred to Finished Goods by using the Equivalent Units Schedule. This process uses FIFO costing. Determine the amounts for the following. 9. a) Ending Work- b) Ending Finished Goods Inventory in Units AND Dollars c) Cost of Goods Sold d) Over/Under Applied Manufacturing Overhead e) Show and calculate an Income Statement f) Over or Under applied COGS g) Gross Profit h) Net Income -Process Inventory in Units AND Dollars 8 | Page 4CCOUNTING OCTETY Manufacturing Process Information Teddy started a small manufacturing plant that fabricates small scale trucks. The manufacturing process starts with plastic nellets mold, they are cooled and then inspected. If the truck passes inspection, the wheels are added at the end and they are transferred to finished goods. This process is completely automated. Direct material plastic is added 100 % at the beginning of the process; direct material wheels are added 100 % as the last step in the process Conversion costs are added equally throughout the process. Conversion is 45 % complete for the beginning inventory work in process and 55% complete for the ending inventory work in process At the beginning of the accounting period, Teddy started 5,200 trucks into production. Estimated factory overhead is $1,300. This information is to be used to determine the application rate for overhead. Estimated and actual direct labor costs totaled $2,000. Actual factory overhead costs totaled $1,500. Selling and Administrative Expenses totaled $1,000 The following information is available concerning the direct materials. Direct Materials-Plastic Beginning inventory Purchase of plastic Ending Inventory plastic makes 2 trucks 0 pounds @ $2.50 a pound 2,800 pounds @$2.50 a pound 200 pounds @ $2.50 a pound One pound Direct Materials- Wheels (there are four wheels for each truck) 0 wheels@$0.10 a wheel 20,800 wheels@$0.10 a wheel Beginning inventory Purchase of wheels The work in process account has the following information Beginning Work in Process contains 0 trucks Ending work process contains 300 trucks The finished goods account has the following Information Beginning Finished Goods Ending Finished Goods Tax rate is 35 % 0 trucks 2,000 trucks 2900 trucks were sold at $6.50 10 | P age Teddy's Trucks 2 Part Two Step 1: Determine the started and completed units by using the following formula Started-Ending Completed and Transferred Out-Beginning 5200-300- 4900 4 Answer: 1 5 Step 2: Prepare an equivalent units schedule. 7 Equivalent Units Answer: 2.3,4 Whole Units Direct Direct Conversion Cost Materials-Plasti Material-Wheels 10 (Actual) CS Beginning Started/Completed 0 11 0 4900 12 4900 4900 4900 Completes/Transferred Out 13 Ending 300 165 14 300 C 5200 Total 5200 4900 5065 15 16 Safari File Edit View History Bookmarks Window Help Teddy's Trucks Statement of Cash Flow File Edit View Insert Format Data Tools Form Add-ons 100% % .0 .00 123 Arlal fx A 33 34 3.Total cost 2,800 X $2.50-$7,000.00 35 $7,000.00/5,200=$1.346 3.cost per equivalent unit 36 37 200 X $2.50=$500.00 4. Total cost 38 $500.00/4,900=$0.102 4. Cost per equivalent unit 39 40 41 42 43 44 45 46 47 48 49 50 51 StatemenT of Cash FowS Part 2 #1-7