Accounting $102$ Process Costing & ABC Project

Jackson$$s Vacuum Company

Jackson$$s Vacuum company makes two types of vacuums: Basic and Advanced. The factory is set up into $3$ working departments. Both vacuums utilize process #$1$ to assemble the basic components. Those units destined as basic will transition to department #$2$ to be finalized. The advanced vacuums will skip department #$2$ and go directly to the advanced processing department #$3.$

There are $4$ types of raw material. #$1-3$ are all direct materials and #$4$ is an indirect material

#$1$ #$2$ #$3$ #$4$

Beg. Raw Material $13,0006,00045,0007,000$

Purchased on account $$190,000$ $$73,500$ $$404,000$ $$53,500$

End. Raw materials $$7,500$ $$11,000$ $$43,000$ $$0$

Requested materials $$

Dept. #$1$ $$101,500$ in raw material #$1$ was requested, $$40,000$ for #$2,$ $$195,000$ for #$3$

Dept. #$2$ $$20,000$ in raw material #$1$ was requested, $$15,500$ for #$2,$ $$46,000$ for #$3$

Dept. #$3$ $$74,000$ in raw material #$1$ was requested, $$13,000$ for #$2,$ $$165,000$ for #$3$

Indirect materials $($#$4)$ used this year amounted to $$55,000$

There are $3$ type of factory workers. Assembly line, area supervisor, and repairman$/$maintenance$.$

$1.$ Assembly line workers:

a$.12$ workers $$ each work $1,900$ hours per year.

b$.6$ workers work in process $1$ and earn $$12/$hour$.$

c$.$ The other $6$ workers work equally in departments $2$&$3$ and make $$17/$hour$.$

$2.$ In total, there are $2$ supervisors each paid $$70,000$ each and $2$ repairman$/$maintenance each paid $$40,000.$

Other factory overhead consists of the following:

$1.$ Property taxes paid for the year $-$ $$35,000$

$2.$ Utilities paid for the year $-$ $$150,000$

$3.$ Six large machines. Each with a value of $$100,000$ depreciated over $10$ years. Two machines are used in each department.

Factory overhead is allocated using the ABC method and based on machine setups and machine hours

WIP #$1$ WIP #$2$ WIP #$3$

Total units transferred $56,00037,00019,000$

Total machine hours $52,00031,40021,000$

Total machine setups $4,2004,5008,500$

Total Labor hours $11,4004,5606,840$

Factory Overhead using machine hours $=$ Fact. Dep. & Indirect materials total

Factory overhead using machine set ups $=$ Property taxes, utilities and indirect labor total

Department #$1$ had $3,500$ units in beginning WIP that were $50\%$ complete as to conversion costs $($totaling $$12,000)$ and $100\%$ complete for materials $($totaling $42,000).57,500$ units were started into production. Transferred out $56,000$ units which included $37,000$ basic to WIP #$2$ and $19,000$ advanced to WIP #$3.$ The remaining ending inventory was $100\%$ complete for materials and $40\%$ for conversion costs.

Department #$2$ had $2,000$ units in beginning WIP that were $50\%$ complete as to conversion costs $($totaling $$3,000)$ and $100\%$ complete for materials $($totaling $10,000).37,000$ units were started into production. Transferred out $35,000$ units. The remaining ending inventory was $100\%$ complete for materials and $65\%$for conversion costs.

Department #$3$ had $1,000$ units in beginning WIP that were $50\%$ complete as to conversion costs $($totaling $$4,000)$ and $100\%$ complete for materials $($totaling $13,000).19,000$ units were started into production. Transferred out $19,200$ units. The remaining ending inventory was $100\%$ complete for materials and $70\%$ for conversion costs.

Basic and advanced will split the WIP #$1$ based on the number of units of each type. Thus if there were $$100$ in WIP #$1$ and $20$ total units $(14$ basic and $6$ advanced$),$ Each unit would absorb $$5.$ Therefore the basic would account for $$70$ of WIP #$1$

Beginning finished goods for basic vacuums totaled $6,500$ units at a total cost of $$145,000$

Beginning finished goods for advanced vacuums totaled $2,300$ units at a total costs of $$100,000$

Total sales for the basic vacuum were $40,000$ units @ $$55$ each

Total sales for the advanced vacuum were $19,800$ units @ $$90$each

Instructions

A$.$ Prepare the following journal entries

$1.$ Raw material purchases

$2.$ Distribution of raw materials to each WIP or Factory Overhead

$3.$ Accumu