MANUFACTURING PROCESS INFORMATION Lonnie Long, the CEO of Lonnie's Longboards, Inc. has begun a small manufacturing process that will manufacture longboards and then sell the longboards to merchandising companies. The manufacturing process starts with the cutting of the wood. Once the wood is inspected and approved then the items in the assembly kit are attached. This includes hardware, trucks, wheels and bearings. These items will be installed as the final step in the process. Once the longboards are completed, they are then transferred to finished goods. This is a process cost system and the company elects to use the FIFO method of accounting for product costs. Direct material-wood is added 100% at the beginning of the process. Direct material-assembly kit is added 100% as the last step in the manufacturing process. At the beginning of the accounting period, Lonnie estimates that production will be 100,000 longboards during the year. Estimated factory overhead is $155,000. This information is to be used to calculate the pre-determined overhead rate for the manufacturing overhead. Estimated and actual direct labor costs totaled $25,100. Actual factory overhead costs totaled $100,000. The following information is available concerning direct materials. Direct Materials-Wood Beginning inventory 0 - 8 ply natural hard rock maple 9" x 48 Purchase of wood 100,000 boards @ $27.50 a board The company starts 93,000 longboards Each longboard contains 1 - 8 ply natural hard rock maple board Direct Material-Assembly Kit Beginning inventory O assembly kits Purchase of assembly kits 100,000 assembly kits @ $41.00 per longboard Used 86,000 Assembly kits this period. The Work-in-Process account has the following information: Ending work in process inventory is 100% complete as to wood 25% complete as to conversion costs 0% complete as to assembly kits The Finished Goods account has the following Information: The finished goods inventory at January 1, 2020 had a balance of Olongboards at a cost of $0 and on December 31, 2020 had an ending balance of 6,000 longboards. The selling price of the longboard is $85.00. Selling and Administrative Costs totaled $200,000; tax rate is 30%. Using a spreadsheet and based on the information provided in the next section, complete the following requirements: 1. Determine the predetermined overhead rate. 2. Determine the total number of longboards to account for. 3. Prepare an equivalent unit's schedule. The schedule should follow the format below; you may add additional information if you would like. Whole Units Equivalent Units (Actual) Direct Materials Direct Material Conversion Wood Assembly Kits Costs Beginning XXX XXX XXX XXX Start/Completed XXX XXX XXX XXX Completed/Transferred Out XXX XXX XXX XXX Ending XXX XXX XXX XXX 4. Determine the total cost for the wood and the unit amount for the wood for one longboard. 5. Determine the total cost for the assembly kits and the unit cost for each assembly kit. 6. Determine the total conversion cost and the conversion cost per longboard. 7. Determine the total equivalent cost per longboard. 8. Prepare a Cost of Production report. This report should show all costs transferred into Work-in-Process and the costs transferred to Finished Goods. This process uses FIFO costing. 9. Determine the amounts for the following. 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) Gross Margin f) Income from Operations g) Net Income 10. Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period. Prepare journal entries for the accounting period. Use the account numbers in the chart of accounts, below, instead of the accounts names when writing the journal entries. 10000 11000 12000 12100 15000 15050 16000 20000 40000 50000 Chart of Accounts Cash Accounts Receivable DM Wood DM Assembly Kit Work-In-Process WIP Factory Overhead Finished Goods FG Wages Payable Sales COGS a. In the first journal entry record the purchase of the wood and the assembly kit using cash. b. Record the materials transferred to WIP. Again, use one journal entry to record the transfer of the wood and the assembly kit. 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