Audio Escape Inc. manufactures audio speakers. Each speaker requires $125 per un
ID: 2599318 • Letter: A
Question
Audio Escape Inc. manufactures audio speakers. Each speaker requires $125 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
$5,800.00
3
Depreciation
2,900.00
4
Supplies
2,100.00
5
Power
20,700.00
6
Total cell costs for the period
$31,500.00
The operating plan calls for 210 operating hours for the period. Each speaker requires 18 minutes of cell process time. The unit selling price for each speaker is $380. During December, the following transactions occurred:
There were no inventories at the beginning of December.
Determine the ending balance for raw and in process inventory and finished goods inventory.
JOURNAL
1
2
3
4
5
6
7
8
9
10
1
Speaker assembly cell, estimated costs:
2
Labor
$5,800.00
3
Depreciation
2,900.00
4
Supplies
2,100.00
5
Power
20,700.00
6
Total cell costs for the period
$31,500.00
Explanation / Answer
A) Total estimated conversion cost for the mont of December = $31,500
Conversion cost per hour = $31,500/210 hours = $150 per hour
Conversion cost per unit of speaker = $150*18/60 = $45 per unit
Applied conversion cost for 780 speaker units = (780*$125) = $97,500
Total cost per unit of speaker = ($125+$45) = $170 per unit
Journal Entries (Amount in $)
B) Calculation of Ending balance for raw material (Amount in $)
Calculation of Ending balance for work in process inventory (Amount in $)
Calculation of ending balance for Finished goods inventory (Amount in $)
Date Account Titles and description Debit Credit Dec. 2 Direct Materials (800*$125) 100,000 Cash 100,000 (To record purchase of materials for cash) Dec.6 Work in Process (780*$45) 35,100 Conversion costs 35,100 (To record the applied conversion costs to production) Dec.6 Work in Process (780*$125) 97,500 Direct Materials 97,500 (To record applied material costs to production) Dec.21 Finished Goods (765*$170) 130,050 Work in Process 130,050 (To record the transfer of 765 units to Finished goods) Dec.29 Cash (750*$380) 285,000 Sales 285,000 (To record sale of 750 units at $380) Dec.29 Sales 285,000 Finished goods (750*$170) 127,500 Gross Profit ($285,000-$127,500) 157,500 (To record adjustment entry for cost of goods sold and gross profit)Related Questions
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