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 inspected. If the car passes inspection, the wheels are added at the end and they are transferred to finished goods. This process is completed automated.

Direct material aluminum is added 100% at the beginning of the process; direct material wheels are added 100% as the last step in 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.

Following information is available concerning the direct materials.

Direct materials-aluminum

Beginning inventory 0 pounds @ $3.19 a pound

Purchase of aluminum 1,625 pounds @ $3.19 a pound

Ending inventory 0 pounds @ $3.19 a pound

One pound of aluminum pellets makes 4 cars

Direct materials-Wheels (there are four wheels for each car)

Beginning inventory 0 wheels @ $0.15 a wheel

Purchase of wheels 22,000 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 0 cars

Ending Finished Goods 2,920 cars

Tax rate is 30%

3,200 cars were sold at $7.25

Determine the started and completed units by using the following formula:

Started Ending = Completed and Transferred Out Beginning

Prepare an equivalent units schedule. Follow the format below;

	Equivalent units
(Actual)	Whole Actual Units	Direct Materials-Aluminum	Direct Materials- Wheels	Conversion Costs
Beginning	XXXXX	XXXXX	XXXXX	XXXXX
Start/Completed	XXXXX	XXXXX	XXXXX	XXXXX
Completed/Transferred Out	XXXXX	XXXXX	XXXXX	XXXXX
Ending	XXXXX	XXXXX	XXXXX	XXXXX
Total to Account For	XXXXX	XXXXX	XXXXX	XXXXX

Calculate the total cost and the cost per equivalent unit for direct materials aluminum.

Calculate the total cost and the cost per equivalent unit for direct materials wheels.

Calculate the predetermined overhead rate.

Determine the total conversion cost by using the predetermined rate and the direct labor rate and the cost per equivalent for the conversion cost per car.

Determine the unit cost per car.

Prepare a Cost of Production report. This report should show all costs transferred into work-in-process and the costs transferred to finished goods by using equivalents units schedule. Using FIFO costing.

Determine the amounts for the following. Show calculations

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

Show and Calculate an Income Statement

Gross Profit

Net Income

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