Manufacturing Process Information Megan's Mugs, a corporation, started a small manufacturing plant that fabricates mugs. The manufacturing process starts by placing ceramic clay in molds. The molds are fired in a kiln and after cooling are unmolded. After the mugs are inspected, the mugs are designed with a decal and then transferred to finished goods. This process is completely automated. Direct material ceramic clay is added 100% at the beginning of the process. Decals are added 100% at the end of the process. Conversion costs are added equally throughout the process. Conversion is 25% complete for the ending inventory work in process and the decals are 0% complete as to ending inventory. At the beginning of the accounting period, Megan's Mugs estimated that production would be 100,000 cups. Our predetermined factory overhead rate is based on an estimated FOH of $6,000. This information is to be used to determine the application rate for factory overhead. Estimated and actual direct labor costs totaled $31,030. Actual factory overhead costs totaled $5,600. The following information is available concerning direct materials. Direct Materials-Ceramic Clay Beginning Inventory 0 pounds @ $1.60 per pound Purchase of Ceramic Clay 40,000 pounds @ $1.60 per pound 12,500 pounds @ $1.60 per pound Ending Inventory Each coffee mug contains four ounces of ceramic clay. There are sixteen ounces in a pound. The company starts 110,000 mugs for the period. Direct Materials-Decals Beginning Inventory Purchases 0 decals @ .05 per decal 150,000 decals @ .05 per decal Ending Inventory 44,000 decals @ .05 per decal 106,000 decals were used during this period. The Work-in-Process account has the following information. Beginning Work-in-Process contains zero mugs. Ending Work-in-Process contains 4,000 mugs. The Finished Goods account has the following Information: Beginning Finished Goods contains 200,000 mugs 0.90 cach Ending Finished Goods contains 100,000 mugs. The selling price is $2.50 per mug. Selling and Administrative Costs totaled $80,000 and the tax rate was 30%.