Question

a) The Jackpots Dreams Cards Company is a card manufacturer. All direct materials and conversion costs are applied to all of Probal Trading Cards products at an even rate throughout the manufacturing process. For August, the beginning work in process inventory for the Finishing Department was 9.500 units that averaged 65 percent complete Ending work in process inventory was 18.500 units averaging 45 percent complete. Production data shows 188.400 units were started during the period. Beginning work in process inventory costs totaled $11.282 including $7,206 for conversion costs. For the month of August. additional costs totaling $75.264 for direct materials and $111,084 for conversion costs were added in the production department during the period. 1) Prepare in good form a process report 2) Prepare the journal entry to move costs to finished goods 3) Prepare any journal entry, required for costs remaining in WIP. D) Electric Car CO (ECC). Currently manufactures two different types of fully electronic cars in 2021 Type BY is a large SUV whereas Type 8w will be the fastest car in the world with 10 rocket thrusters. ECC has decided to use ABC costing instead of traditional costing The 2021 budget to manufacture these new types include manufacturing overhead of $126,920,760 which has been allocated on each products inspection hours. The expected prime costs of two new types we as follows: Type B Type W Prime Costs $4325 ECC's controller believes the traditional costing system may be providing misleading cost information They have developed an analysis of the 2021 budgeted manufacturing-overhead costs shown in the following chart Cost Driver Budged Activity Budgeted Cost Assembly Assembly hours 10.000 $63,450.000 Inspection Inspection hours 10,000 $27.920,000 Painting Galions of paint 5.000 $22.850.000 Quality control Number of tests 8.000 $12.690.760 Total manufacturing-overhead cost $126.920,760 Actual data regarding the 2021 manufacturing of the Type By and the Type SW is shown in the following table with a total MOH of $216,920,760: Type Typew Budgeted Sales (units) Assembly hours Inspection hours Paint Gallo Tests 2.222 757 767 33 512 555 2.955 2955 1477 2364 Required 1) Using the traditional method Determine the company's predetermined overhead rates) applied Determine how much overhead was applied to Type BY IL Provide the MOH true up jumal entry required for this method at the end of the 2) Using the ABC method i Determine the company's predetermined overhead rate(s) applied Determine how much overhead was aplied to Type BY Provide the MOH true up jumal entry required for this method at the end of the year

Answer 1

Answer is given as per FIFO method since details of opening WIP inventory are available for completion% 1) Conversion Cost Jackpots Dreams Cards Company Cost of Production Report-Finishing Department For the Month Ended August 31 Unit Information - FIFO method Units charged to production: Inventory in process, August 1 9,600 Received from materials storeroom 188,400 Total units accounted for by the Mixing Department 198,000 Units to be assigned cost: Equivalent Units Whole % Direct % Units Completed Materials Completed Inventory in process, Beginning 9,600 35% 3,360 35% Started and completed in August 169,900 100% 169,900 100% Transferred to Finished goods in August 179,500 inventory in process, August 31 18,500 45% 8,325 45% Total Units Accounted for 198,000 Total Equivalent units 181,585 Cost Information Cost per equivalent unit: Direct Conversion Materials Total costs for August in Finished Department $75,264 $111,034 Total Equivalent units 181,585 181,585 Cost per equivalent unit $0.4145 $0.6115 3,360 169,900 8,325 181,585 Cost assigned to production Inventory in process, August 1 Costs incurred in August Total costs accounted for by the Finishing Department Direct Conversion Materials $11,282 $7,296 $75,264 $111,034 $86,546 $118,330 Total Costs $18,578 $186,298 $204,876 Cost allocated to completed and partially completed units: Inventory in process, August 1-balance To complete inventory in process, August 1 Cost of completed August 1 work in process Units Started and completed in August Units completed and transferred to Finished goods $11,282 $1,393 $12,675 $70,421 $83,095 $7,296 $2,055 $9,351 $103,889 $113,240 $18,578 $3,4471 $22,025 $174,3101 $196,335 A Inventory in process, August 31 Total costs assigned by the Finishing Department $3,451 $86,546 $5,090 $118,330 $8,541 B $204,876 A+B 2) Credit Debit $196,335 Date Account Titles and Explanation Aug-31 Finished Goods Work in process - Finishing Department (To record transfer of Finished goods ) $196,335 3) No entry needed for closing WIP inventory remaining in Finishing Department

b) 1) i) Plantwide overhead rate based on inspection hours Total Manufacturing Overheads $126,920,760 Total Inspection hours 10,000 $12,692.08 per inspection hour ii) Overhead applied-Type BY Overhead rate per inspection hours inspection hours Total overheads applied Budgeted sales units Manufacturing overhead per unit $12,692.08 767 $9,734,822 2,222 $4,381.11 Credit Debit $9,734,822 Account Titles and Explanations Work in process Account Manufacturing overheads (To record manufacturing overheads applied) $9,734,822 2 i) Calculation of activity rates Activity Cost pool Assembly Inspection Painting Quality control Total Manufacturing overheads costs Cost Pool $63,460,000 $27,920,000 $22,850,000 $12,690,760 $126,920,760 Total Activities 10,000 10,000 5,000 8,000 Activity Rate $6,346.00 per assembly hour $2,792.00 per inspection hour $4,570.00 per gallon of paint $1,586.35 per test ii) Allocation of Overheads as per ABC method-Type 8Y Expected use of cost drivers Assembly 767 Inspection 767 Painting 383 Quality control 612 Total Allocation Total units Manufacturing Overhead cost per unit Activity Cost rate Assigned $6,346.00 $4,867,382 $2,792.00 $2,141,464 $4,570.00 $1,750,310 $1,586.35 $970,843 $9,729,999a 2,222b $4,378.94 a/b Credit Debit $9,729,999 Account Titles and Explanations Work in process Account Manufacturing overheads (To record manufacturing overheads applied) $9,729,999