Audio Escape Inc. manufactures audio speakers. Each speaker requires $145 per un
ID: 2480472 • Letter: A
Question
Audio Escape Inc. manufactures audio speakers. Each speaker requires $145 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for December:
1
Speaker assembly cell, estimated costs:
2
Labor
$6,300.00
3
Depreciation
2,800.00
4
Supplies
2,400.00
5
Power
1,100.00
6
Total cell costs for the period
$12,600.00
The operating plan calls for 180 operating hours for the period. Each speaker requires 18 minutes of cell process time. The unit selling price for each speaker is $360. During December, the following transactions occurred:
There were no inventories at the beginning of December.
1
Speaker assembly cell, estimated costs:
2
Labor
$6,300.00
3
Depreciation
2,800.00
4
Supplies
2,400.00
5
Power
1,100.00
6
Total cell costs for the period
$12,600.00
Explanation / Answer
Answer A. Journal Entry Date Particulars Dr. Amt Cr. Amt Dec-02 Direct material Dr. 90,625 To Accounts Payable / Cash 90,625 (Record the Purchase of 625 Speaker Units) Dec-06 WIP Dr. 12,600 To Direct Labor 6,300 To MOH 6,300 (record the Conversion Cost to WIP for 600 Speaker Units) Direct Labor - $6300 / 180 Hrs X 0.30 Hrs X 600 Speakes = $6300 MOH Dep. $2800/180 Hrs X 0.30 X 600Nos 2,800 Supplies $2400/180 Hrs X 0.30 X 600Nos 2,400 Power $1100/180 Hrs X 0.30 X 600Nos 1,100 Total MOH 6,300 Dec-21 Finished Goods Inventory Dr. 97,110 To WIP - 12600/600 Nos X 585 Nos 12,285 To Direct Materials - 585 Nos X $145 84,825 (record the Finished Good Completed during the period - 585 Nos) Dec-29 Cash / Accounts Receivables Dr. 205,200 To Sales - 570 Nos X $360 205,200 (record the Sales of Speakers 570 Nos) Dec-29 Cost of Goods Sold Dr. 94,620 To Finished Goods Inventory 94,620 (record the Cost of goods Sold) Cost oif Goods Sold = $97110 / 585 Nos X 570 Nos = $94620 Answer B. Ending Balance of Raw Matrerial Direct Material purch. - 625 Nos X $145 90,625 Less: Transff. To WIP - 585 Nos X $145 (84,825) Ending Bal. of Raw Matrerial - 40 nos X $145 5,800 Ending Balance of WIP Conversion Cost transff. - 600 Nos 12,600 Less: Transffered to Finished Goods - 585 Nos (12,285) Ending Balance of WIP - 15 Nos 315 Finished Goods Inventory Finished Goods Produced - 585 Nos 97,110 Less; Sold During the Period - 570 Nos (94,620) Ending Balance - 15 Nos 2,490
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