Calculations Shown

Part Two Instructions

using a spreadsheet and based on the information provided in the next section, complete the following requirements:

 Determine the predetermined overhead rate.

Determine the total number of plastic airplanes to account for.

Prepare an equivalent units schedule. The schedule should follow the format below; you may add additional information if you would like.

Determine the total costs for the plastic and the unit plastic cost for the airplanes.

Determine the total conversion cost and the conversion cost per airplane.

Determine the total equivalent cost per airplane.

Prepare a Cost of Production report.  This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods.   This process uses FIFO costing. 

Determine the amounts for the following.  Show calculations for credit.

Ending Work-in-Process Inventory in Units AND Dollars

Ending Finished Goods Inventory in Units AND Dollars

Cost of Goods Sold

Over/Under Applied Manufacturing Overhead

Gross Margin

Tax Amount

Net Income

Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period. 

 Manufacturing Process Information

Andrew’s Airplanes, a corporation, started a small manufacturing plant that fabricates plastic airplanes. The manufacturing process starts by melting the plastic into a semi-liquid state and then pouring the material into a mold press. The final step of the process is to add the three wheels. The resulting airplanes are then sent to quality control and if the inspection is approved, they are transferred to finished goods. This process is completely automated.

Direct material, Plastic is added 100% at the beginning of the process. Wheels are added 100% at the end of the process.

Conversion costs are added equally throughout the process. Conversion is 25% complete for the ending inventory work in process and the wheels are 0% complete as to ending inventory.

At the beginning of the accounting period, Andrew’s Airplanes estimated that production would be 150,000 units. Our predetermined factory overhead rate is based on an estimated FOH of $30,000. This information is to be used to determine the application rate for overhead.

Estimated and actual direct labor costs totaled $88,775.

Actual factory overhead costs totaled $27,000.

The following information is available concerning direct materials.

Direct Materials-Plastic                                

Beginning Inventory                      0 pounds @ $3.00

Purchase of Plastic                75,000 pounds @ $3.00

Ending Inventory                      5,000 pounds @ $3.00

One pound of plastic makes 2 plastic airplanes and the company started 140,000 airplanes.

Direct Materials-Wheels

            Beginning Inventory                       0 wheels @ .02 per wheel

            Purchases                          450,000 wheels @ .02 per wheel

              Ending Inventory                  60,000 wheels  @ .02 per wheel

The Work-in-Process account has the following information

Beginning Work-in-Process contains 0 airplanes

Ending Work-in-Process contains 10,000 airplanes

The Finished Goods account has the following Information

Beginning Finished Goods contains 0 airplanes

Ending Finished Goods contains 15,000 airplanes

The selling price is $5 per airplane and 115,000 airplanes were sold

Selling and Administrative Costs totaled $130,000

 Note: Tax rate is 30 %. 

(Round your conversion cost per unit to the nearest cent and everything else to the nearest dollar.)