I SEE THE LIGHT Ooo 0 Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lampsightlights 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. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 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 Process Costing Part 2 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. You may find it easier to work on this project if you print a hard copy of all the pages. . B C E F G H I See The Light Projected Income Statement For the Period Ending December 31, 20x1 -am +OPE $ 1,125,000.00 750,000.00 $ 375,000.00 Sales 25,000 lamps @ $45.00 Cost of Goods Sold @ $30.00 Gross Profit Selling Expenses: Fixed Variable (Commission per unit) @ $3.00 Administrative Expenses: Fixed Variable @ $2.00 Total Selling and Administrative Expenses Net Profit $23,000.00 75,000.00 $ 98,000.00 $42.000.00 50,000.00 92,000.00 190,000.00 185,000.00 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I See The Light Projected Balance Sheet As of December 31, 20x1 $ 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 $ 200,210.00 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 13,200.00 $ 213.410.00 $ $ 54,000.00 54,000.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147,410.00 159,410.00 $ 213,410.00 4 PART 4 5 6 Process Costing - First-In First-Out 7 8 General Information 9 10 The I See The Light Company has a related company that produces the figurines. They use process costing 11 in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars. 21 The material is added at the beginning of the process. The labor and overhead costs are assumed 22 to be added uniformly throughout. 23 24 25 35 36 37 38 Month of January 39 49 Selected information for January is presented below. Note that the applied overhead rate was 50 50% of direct labor costs in the molding department. 51 52 53 Molding Department 63 64 Goods in-process as of January 1 were 2,800 figurines at a cost of $47,320.00. Of this amount, $44,800.00 was from 65 raw materials added, $1,680.00 for labor and $840.00 for overhead. These 2,800 figurines were assumed to be 66 30.00% complete as to labor and overhead. 67 77 During January, 25,000 units were started, $404,250.00 of materials and $43, 120.00 of labor costs were incurred. 78 79 The 6,000 figurines that were in-process at the end of January were assumed to be 10.00% complete to 80 labor and overhead. 81 91 All figurines in January passed inspection. 92 January {12.01) (12.02) {12.03) {12.04) {12.05) '. {12.06) {12.07) {12.08) 4 5 6 7 8 MOLDING 9 10 Physical Flow of Units 11 12 Work-in-Process - Beginning 19 Units Started this Period 20 Units to Account for 21 22 Total transferred out Work-in-Process - Ending 30 Total Accounted for 31 32 33 34 41 42 43 Equivalent Units Material (Round to three places, ##.### 44 45 52 53 54 55 Equivalent Units Conversion (Round to three places, ##.###.###) 56 63 64 65 66 67 74 75 Total cost in the Beginning Inventory (Round to two places, #, ###) 76 77 78 85 86 87 88 Total cost of Material this period (Round to two places, #.###.##) 89 96 97 98 99 Total cost of Conversion this period (Round to two places, ### 100 107 108 109 110 Total cost to account for (Round to two places, #.###.##) 111 112 113 114 Cost per equivalent unit of Material this period (Round to seven places, ########) 115 116 117 118 119 Cost per equivalent unit of Conversion this period (Round to seven places, ######) 120 121 122 123 124 125 126 Cost of the units transferred, material and convesion (Round to two places, $######## 127 128 129 130 131 132 133 134 Cost of the ending inventory, material and convesion (Round to two places, $#######) 135 136 137 Total Cost accounted for (Round to two places, $##### 128 {12.09) ..) {12.10) {12.11) {12.12) {12.13) {12.14) {12.15) (12.16) 11 12 To keep records of the actual cost of a special order job, a Job Order Cost System has been developed. 13 Overhead is applied at the rate of 50% of the direct labor cost. 15 16 17 18 Job Order Costing Section 19 21 On January 1, 20x2, Division S began Job 2407 for the Client, THE BIG CHILDREN STORE. The 22 job called for 4,000 customized lamps. The following set of transactions occurred from 23 January 5 until the job was completed: 24 25 5-Jan Purchased 4,050 Lamp Kits @ $16.60 per kit. 27 9-Jan 4,100 sets of Lamp Kits were requisitioned, including all those in the Beginning Inventory. 28 17-Jan Payroll of 610 Direct Labor Hours @ $9.75 per hour. 29 30-Jan Payroll of 660 Direct Labor Hours @ $10.00 per hour. 30 30-Jan 3,990 lamps were completed and shipped. All materials requisitioned were 31 used or scrapped, and are a cost of normal processing. 33 34 Month End Overhead Information 35 Actual Variable Manufacturing Overhead $ 1,447.80 36 Actual Fixed Manufacturing Overhead $ 40,623.45 37 39 40 41 42 43 Round to two 45 places, $##.## 46 47 Cost of Direct Material incurred in Manufacturing Job 2407 48 49 51 52 53 Cost of Direct Labor Incurred in Manufacturing Job 2407 54 55 57 58 59 Cost of Manufacturing Overhead Applied to Job 2407 60 61 63 64 65 Cost of manufacturing one lamp 66 67 68 69 70 71 {13.01} {13.02) {13.03} {13.04) 70 I SEE THE LIGHT Ooo 0 Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lampsightlights 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. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 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 Process Costing Part 2 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. You may find it easier to work on this project if you print a hard copy of all the pages. . B C E F G H I See The Light Projected Income Statement For the Period Ending December 31, 20x1 -am +OPE $ 1,125,000.00 750,000.00 $ 375,000.00 Sales 25,000 lamps @ $45.00 Cost of Goods Sold @ $30.00 Gross Profit Selling Expenses: Fixed Variable (Commission per unit) @ $3.00 Administrative Expenses: Fixed Variable @ $2.00 Total Selling and Administrative Expenses Net Profit $23,000.00 75,000.00 $ 98,000.00 $42.000.00 50,000.00 92,000.00 190,000.00 185,000.00 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I See The Light Projected Balance Sheet As of December 31, 20x1 $ 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 $ 200,210.00 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 13,200.00 $ 213.410.00 $ $ 54,000.00 54,000.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147,410.00 159,410.00 $ 213,410.00 4 PART 4 5 6 Process Costing - First-In First-Out 7 8 General Information 9 10 The I See The Light Company has a related company that produces the figurines. They use process costing 11 in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars. 21 The material is added at the beginning of the process. The labor and overhead costs are assumed 22 to be added uniformly throughout. 23 24 25 35 36 37 38 Month of January 39 49 Selected information for January is presented below. Note that the applied overhead rate was 50 50% of direct labor costs in the molding department. 51 52 53 Molding Department 63 64 Goods in-process as of January 1 were 2,800 figurines at a cost of $47,320.00. Of this amount, $44,800.00 was from 65 raw materials added, $1,680.00 for labor and $840.00 for overhead. These 2,800 figurines were assumed to be 66 30.00% complete as to labor and overhead. 67 77 During January, 25,000 units were started, $404,250.00 of materials and $43, 120.00 of labor costs were incurred. 78 79 The 6,000 figurines that were in-process at the end of January were assumed to be 10.00% complete to 80 labor and overhead. 81 91 All figurines in January passed inspection. 92 January {12.01) (12.02) {12.03) {12.04) {12.05) '. {12.06) {12.07) {12.08) 4 5 6 7 8 MOLDING 9 10 Physical Flow of Units 11 12 Work-in-Process - Beginning 19 Units Started this Period 20 Units to Account for 21 22 Total transferred out Work-in-Process - Ending 30 Total Accounted for 31 32 33 34 41 42 43 Equivalent Units Material (Round to three places, ##.### 44 45 52 53 54 55 Equivalent Units Conversion (Round to three places, ##.###.###) 56 63 64 65 66 67 74 75 Total cost in the Beginning Inventory (Round to two places, #, ###) 76 77 78 85 86 87 88 Total cost of Material this period (Round to two places, #.###.##) 89 96 97 98 99 Total cost of Conversion this period (Round to two places, ### 100 107 108 109 110 Total cost to account for (Round to two places, #.###.##) 111 112 113 114 Cost per equivalent unit of Material this period (Round to seven places, ########) 115 116 117 118 119 Cost per equivalent unit of Conversion this period (Round to seven places, ######) 120 121 122 123 124 125 126 Cost of the units transferred, material and convesion (Round to two places, $######## 127 128 129 130 131 132 133 134 Cost of the ending inventory, material and convesion (Round to two places, $#######) 135 136 137 Total Cost accounted for (Round to two places, $##### 128 {12.09) ..) {12.10) {12.11) {12.12) {12.13) {12.14) {12.15) (12.16) 11 12 To keep records of the actual cost of a special order job, a Job Order Cost System has been developed. 13 Overhead is applied at the rate of 50% of the direct labor cost. 15 16 17 18 Job Order Costing Section 19 21 On January 1, 20x2, Division S began Job 2407 for the Client, THE BIG CHILDREN STORE. The 22 job called for 4,000 customized lamps. The following set of transactions occurred from 23 January 5 until the job was completed: 24 25 5-Jan Purchased 4,050 Lamp Kits @ $16.60 per kit. 27 9-Jan 4,100 sets of Lamp Kits were requisitioned, including all those in the Beginning Inventory. 28 17-Jan Payroll of 610 Direct Labor Hours @ $9.75 per hour. 29 30-Jan Payroll of 660 Direct Labor Hours @ $10.00 per hour. 30 30-Jan 3,990 lamps were completed and shipped. All materials requisitioned were 31 used or scrapped, and are a cost of normal processing. 33 34 Month End Overhead Information 35 Actual Variable Manufacturing Overhead $ 1,447.80 36 Actual Fixed Manufacturing Overhead $ 40,623.45 37 39 40 41 42 43 Round to two 45 places, $##.## 46 47 Cost of Direct Material incurred in Manufacturing Job 2407 48 49 51 52 53 Cost of Direct Labor Incurred in Manufacturing Job 2407 54 55 57 58 59 Cost of Manufacturing Overhead Applied to Job 2407 60 61 63 64 65 Cost of manufacturing one lamp 66 67 68 69 70 71 {13.01} {13.02) {13.03} {13.04) 70