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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 Requested materials - Dept. \#1 \$106,675 in raw material \#1 was requested, $40,000 for #2,$195,000 for #3 Dept. \#2 \$20,000 in raw material \#1 was requested, $15,484 for \#2, \$46,000 for \#3 Dept. \#3 \$74,000 in raw material \#1 was requested, \$13,000 for \#2, \$172,238 for \#3 Indirect materials (\#4) used this year amounted to $56,222 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 $16/ hour. 2. In total, there are 2 supervisors each paid $72,786 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 $148,897 3. Six large machines. Each with a value of $100,000 depreciated over 10 years. Two machines are used in each department. Factorv overhead is allocated using the ABC method and based on machine setups and machine hours 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 ). 57,003 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 64% 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 $142,384 Beginning finished goods for advanced vacuums totaled 2,300 units at a total costs of $98,555 Total sales for the basic vacuum were 38,033 units @ \$55 each Total sales for the advanced vacuum were 19,800 units @ \$87each Instructions A. Prepare the following journal entries 1. Raw material purchases 2. Distribution of raw materials to each WIP or Factory Overhead 3. Accumulation of wages owed 4. Distribution of wages to each WIP or Factory Overhead 5. Accumulation of factory overhead 6. Allocation of Factory overhead using ABC per WIP 7. Transition of WIP 1 goods to either WIP 2 or 3 8. Transition of WIP 2 goods to Finished Goods 9. Transition of WIP 3 goods to Finished Goods 10. Sale of Basic vacuums 11. Sale of Advanced vacuums B. What is the Gross Profit of each separately and combined? Main Processing page \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \begin{tabular}{l} Raw \\ Materials \end{tabular} & \begin{tabular}{l} (see \\ separate Ts \\ tab) \end{tabular} & & \begin{tabular}{l} Factory \\ Labor \end{tabular} & \begin{tabular}{l} (see \\ separate Ts \\ tab) \end{tabular} & & Factory OH & & & Finish & hed Goods & - Basic \\ \hline date & dr. & cr. & date & dr. & cr. & date & dr. & cr. & date & dr. & cr. \\ \hline Beg & 88,000 & & New wages & & & Ind. RM & & & beg & & \\ \hline Purchases & 719,995 & & WIP#1 & & & Ind. FL & & & \#8 & & \\ \hline WIP \#1 & & & WIP#2 & & & Other FO & & & bal & & \\ \hlineWIP#2 & & & WIP#3 & & & WIP \#1 & & & m10 & & \\ \hlineWIP#3 & & & FO & & & WIP \#2 & & & bal & & \\ \hline FO & & & bal & & & WIP \#3 & & & & & \\ \hline bal & 831,995 & & & & & bal & & & beg. ur & Inits & \\ \hline & & & & & & & & & transfe & ferred in & \\ \hline & & & & & & & & & AFS & & \\ \hline & & & & & & & & & Sold & & \\ \hline WIP-step 1 & & & WIP-Step 2 & & & WIP-Step 3 & & & Ending & Ig units & \\ \hline date & dr. & cr. & date & dr. & cr. & date & dr. & cr. & Cost /u & & \\ \hline Beg DM & & & Beg DM & & & Beg DM & & & sales/un & & \\ \hline Beg CC & & & Beg CC & & & Beg CC & & & & & \\ \hline all new DM & & & all new DM & & & all new DM & & & & & \\ \hline new Labor & & & new Labor & & & new Labor & & & Finish & hed Goods - A & \\ \hline New FO & & & New FO & & & New FO & & & date & dr. & cr. \\ \hline bal. & & & W7(baggage) & & & w7(baggage) & & & Beg. & & \\ \hline W7(baggage) & & & bal. & & & bal. & & & & & \\ \hline End bal & & & mB(baggage) & & & m9(baggage) & & & bal & & \\ \hline & & & & & & & & & \#11 & & \\ \hline & & & & & & & & & bal & & \\ \hline beg. units & & & beg. units & & & beg. units & & & & & \\ \hline started & & & started & & & started & & & beg. u & & \\ \hline ending unit & & & ending units & & & ending units & & & transfe & ferred in & \\ \hline transferred & & & transferred & & & transferred & & & AFS & & \\ \hline & CC \% complete & & & CC % complete & & & CC % complete & & & & \\ \hline & & & & & & & & & Sold & & \\ \hline DM Equivale & Ilent units & & DM Equivalen & Int units & & DM Equivalen & Int units & & Ending & ig units & \\ \hline CC Equivale & lent units & & CC Equivalen & nt units & & CC Equivalen & nt units & & Cost /u & & \\ \hline & & & & & & & & & sale pr & & \\ \hline DM cost/unit & & & DM cost/unit & & & DM cost/unit & & & & & \\ \hlineCCcostiunit & & & CC costunit & & & CCcostiunit & & & Sales & Revenue & \\ \hline Total/unit & & & Total/unit & & & Total/unit & & & date & dr. & cr. \\ \hline & & & & & & & & & #10 & & \\ \hline units transfe & ferred \#2 & & units transfer & & & units transfer & & & 11 & & \\ \hline costs transfer & efred to 112 & & total costs thi & is dept. & & total costs thi & is dept & & bal & & \\ \hline & & & (+) baggage & & & (+) baggage & & & cogs & & \\ \hline units transfer & erred #3 & & Total cost tran & insferred & & Total cost tran & Insferred & & date & dr. & cr. \\ \hline costs transfe & ferred to \#3 & & & & & & & & #10 & & \\ \hline & & & Total cost/uni & & & Total costhunit & & & \#11 & & \\ \hline Total costs tra & ransferred & & & & & & & & bal & & \\ \hline & & & & & & & & & Basic Gross & Profit & \\ \hline & & & & & & & & & Advanced Gr & iross Profit & \\ \hline & & & & & & & & & Total Gross P & Profit & \\ \hline \end{tabular}