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I SEE THE LIGHT Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lamps/nightlights for use in bedrooms. These
I SEE THE LIGHT Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lamps/nightlights for use in bedrooms. These lamps are sold nationwide through a group of independent sales representatives who have an exclusive sales region. The business is in its tenth year and has asked you to assist in planning for next year's operations. The lamps are ceramic figurines of animals, boats, boys and girls playing and singing, all in delightful colors. The owner of the business, Big Al, creates a drawing for the figurine and faxes it to a plant in China where a mold is created and a sample produced and hand painted. If the mold meets the expectations of Big Al an order of 500 lamp parts is placed. Each lamp kit consists of the parts required to complete one lamp; a figurine, a lamp shade and the required electrical components. There are presently 10 different figurines that come in six different colors; 60 models. There are presently 10 workers in the plant. They are responsible for receiving the raw material, manufacturing the product, packing and shipping. In addition to Big Al there are two office workers who are responsible for all administrative duties. Big Al had his accountant prepare the Projected Income Statement and Balance Sheet presented on page two. Big Al heard about your skills in managerial accounting and would like your assistance in the following areas: Part 1 Part 2 Process Costing Job Order Costing To upload your work to Big Al the file without changing the name. Pay attention to the specific location that Excel saves the file. Return to the bottom of the page that you downloaded the file from; Cybertext.com, The Book List, Building Blocks of Accounting--A Managerial Perspective, Enter password, Upload Your Excel File. If you upload an old version of the file the results will not update. Keep two copies of your spreadsheet in two separate places in case one of Big Al's competitors sends someone to destroy your work or it is lost in transmission. Sales Cost of Goods Sold See The Light Projected Income Statement For the Period Ending December 31, 20x1 25,000 lamps @$45.00 @ $30.00 Gross Profit Selling Expenses: Fixed $23,000.00 Variable (Commission per unit) @ $3.00 75,000.00 $ 98,000.00 Administrative Expenses: Fixed $42,000.00 Variable @ $2.00 50,000.00 92,000.00 Total Selling and Administrative Expenses: Net Profit $1,125,000.00 750,000.00 $ 375,000.00 190,000.00 $ 185,000.00 I See The Light Projected Balance Sheet As of December 31, 20x1 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets 500 @ $16.00 0 3000 @ $30.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 34,710.00 67,500.00 8,000.00 90,000.00 $ 200,210.00 $ 20,000.00 6,800.00 13,200.00 $ 213,410.00 $ 12,000.00 147,410.00 $ 54,000.00 $ 54,000.00 159,410.00 $ 213,410.00 Month of January Selected information for January is presented below. Note that the applied overhead rate was 50% of direct labor costs in the molding department. Molding Department Goods in-process as of January 1 were 3,200 figurines at a cost of $55,040.00. Of this amount, $51,200.00 was from raw materials added, $2,560.00 for labor and $1,280.00 for overhead. These 3,200 figurines were assumed to be 40.00% complete as to labor and overhead. During January, 22,000 units were started, $355,740.00 of materials and $44,340.00 of labor costs were incurred. The 3,500 figurines that were in-process at the end of January were assumed to be 50.00% complete to labor and overhead. All figurines in January passed inspection. MOLDING Physical Flow of Units Work-in-Process - Beginning Units Started this Period Units to Account for Total transferred out Work-in-Process - Ending Total Accounted for Equivalent Units Material (Round to three places, ##.###.###) Equivalent Units Conversion (Round to three places, ##.###.###) Total cost in the Beginning Inventory (Round to two places, ##,###.##) Total cost of Material this period (Round to two places, ##.###.##) {12.01} {12.02} {12.03} {12.04) {12.05} {12.06} {12.07} {12.08} {12.09} Total cost of Conversion this period (Round to two places, ##.###.##) Total cost to account for (Round to two places, ##.###.##) Cost per equivalent unit of Material this period (Round to seven places, ###.######) Cost per equivalent unit of Conversion this period (Round to seven places, ###.#######) {12.10} {12.11} {12.12} {12.13} Cost of the units transferred, material and convesion (Round to two places, $###,###.## {12.14} Cost of the ending inventory, material and convesion (Round to two places, $###,###.## ) Total Cost accounted for (Round to two places, $###,###.## ) {12.15} {12.16}
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