Question

Vintage Audio Inc. manufactures audio speakers. Each speaker requires $127 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:

Speaker assembly cell, estimated costs:
Labor	$45,050
Depreciation	6,040
Supplies	2,200
Power	1,655
Total cell costs for the period	$54,945

The operating plan calls for 185 operating hours for the period. Each speaker requires 20 minutes of cell process time. The unit selling price for each speaker is $344. During the period, the following transactions occurred:

1. Purchased materials to produce 425 speaker units.
2. Applied conversion costs to production of 405 speaker units.
3. Completed and transferred 385 speaker units to finished goods.
4. Sold 370 speaker units.

There were no inventories at the beginning of the period.

a. Journalize the summary transactions (1)-(4) for the period. Do not round interim calculations.

1.
2.
3.
4. Sale
4. Cost

b. Determine the ending balance of raw and in process inventory and finished goods inventory.

Raw and In Process Inventory, ending balance	$
Finished Goods Inventory, ending balance	$

Answer 1

Solution a:

Budgeted conversion cost per unit = $54,945 / 185 *20/60 = $99 per unit

Journal Entries - Vintage Audio Inc.
Event	Particulars	Debit	Credit
1	Raw and In Process Inventory Dr	$53,975.00
	To Accounts Payable (425*$127)		$53,975.00
2	Raw and In Process Inventory Dr	$40,095.00
	To Conversion cost (405*$99)		$40,095.00
3	Finished goods inventory Dr (385*$226)	$87,010.00
	To Raw and In Process Inventory		$87,010.00
4.1	Accounts receivables Dr (370*$344)	$127,280.00
	To Sales		$127,280.00
4.2	Cost of goods sold Dr (370*$226)	$83,620.00
	To Finished goods inventory		$83,620.00

Solution b:

Raw and In Process Inventory, ending balance = $53,975 + $40,095 - $87,010 = $7,060

Finished Goods Inventory, ending balance = $87,010 - $83,620 = $3,390