Carlo started a small manufacturing plant that fabricates small scale crazy cars that race and spin. The manufacturing process starts with aluminum pellets being put into an aluminum molding machine. After the cars are shaped in the mold, they are cooled and then inspected. If the car passes inspection, the wheels are added at the end and they are transferred to finished goods. This process is completely automated. Direct material aluminum is added 100% at the beginning of the process; direct material wheels are added 100% as the last step in the process. Conversion costs are added equally throughout the process. Conversion is 45% complete for the beginning inventory work in process and 55% complete for the ending inventory work in process. At the beginning of the accounting period, Carlo estimated that production would be 6,500 cars. Estimated factory overhead is $3,250. This information is to be used to determine the application rate for overhead. Estimated and actual direct labor costs totaled $2,200. Actual factory overhead costs totaled $2,500. Selling and Administrative Expenses totaled $1,500 The following information is available concerning the direct materials. Direct Materials-Aluminum Beginning inventory Purchase of aluminum Ending Inventory 0 pounds @ $3.19 a pound 1,625 pounds @ $3.19 a pound One pound of aluminum pellets makes 4 cars 0 pounds @ $3.19 a pound Direct Materials-Wheels (there are four wheels for each car) Beginning inventory Purchase of wheels O wheels @ $0.15 a wheel 26,000 wheels @ $0.15 a wheel The work in process account has the following information Beginning Work in Process contains 0 cars Ending work in process contains 380 cars The finished goods account has the following Information Beginning Finished Goods Ending Finished Goods Tax rate is 30% 3200 cars were sold at $7.25 0 cars 2,920 cars Using a spreadsheet and based on the information provided in the next section, complete the following requirements: 1. Determine the started and completed units by using the following formula: Started - Ending = Completed and Transferred Out - Beginning 2. Prepare an equivalent units schedule. The schedule should follow the format below; you may add additional information if you would like. (Remember that the schedule is for units of cars, not aluminum and wheels.) Equivalent Units Whole Units Actual Direct Materials- Aluminum Direct Materials - Wheels Conversion Costs (Actual) Beginning XXX XXX XXX XXX Start/Completed XXX XXX XXX XXX Completed/Transferred Out XXX XXX XXX XXX Ending XXX XXX XXX XXX Total to Account For 3. Calculate the total cost and the cost per equivalent unit for the direct materials aluminum. If the number is not exact round to the nearest cent. 4. Calculate the total cost and the cost per equivalent unit for the direct materials wheels. If the number is not exact round to the nearest cent. 5. Calculate the predetermined overhead rate. If the number is not exact round to the nearest cent. 6. Determine the total conversion cost by using the predetermined rate and the direct labor cost and the cost per equivalent unit for the conversion cost per car. If the number is not exact round to the nearest cent. 7. Determine the unit cost per car. 8. Prepare a Cost of Production report rounding to the nearest cent. This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods by using the Equivalent Units Schedule. This process uses FIFO costing. 9. Determine the amounts for the following before entering your answers onto blackboard. a) Ending Work-in-Process Inventory in Units AND Dollars b) Ending Finished Goods Inventory in Units AND Dollars c) Cost of Goods Sold d) Over/Under Applied Manufacturing Overhead e) Show and calculate an Income Statement f) Gross Profit g) Net Income 10. Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period and use the account numbers as listed below instead of account names. 11. Chart of Accounts Account Assets Cash Number 10000 Accounts Receivable 11000 Raw Materials - Aluminum 12000 Raw Materials - Wheels 12100 WIP 12200 FOH 12300 FG 12400 Liabilities Accounts Payable 20000 Wages Payable 21000 Sales 40000 COGS 50000 Example: Sales on Account would be Debit 11000, Credit 40000. a. In the first journal entry record the purchase of the aluminum and the wheels using cash. b. Record the materials transferred to WIP. Again use one journal entry to record the transfer of the aluminum and the wheels. c. Record the direct labor into WIP using wages payable. d. Record the applied FOH. e. Record the actual FOH using cash. f. Record the over or under applied FOH. g. Record the sale of the goods on account along with the cost of the inventory that was sold. Combine both into one journal entry showing the sale first and inventory second. All sales were made on account, aluminum and wheels and wages were paid on account. The actual FOH was paid using cash. Make sure all numbers are rounded to the nearest cent