The following events apply to Stuart Manufacturing Company. Assume that all transactions are cash transactions unless otherwise indicated. Transactions for the Year 1 Accounting Period 1. The company was started on January 1, Year 1, when it acquired $215,000 cash by issuing common stock. 2. The company purchased $58,000 of direct raw materials with cash and used $2,240 of these materials to make its products in January 3. Employees provided 1,100 hours of labor at $6.10 per hour during January. Wages are paid in cash. 4. The estimated manufacturing overhead costs for Year 1 were $78,300. Overhead is applied on the basis of direct labor hours. The company expected to use 13,500 direct labor hours during Year 1. Calculate an overhead rate and apply the overhead for January to work in process inventory. 5. The employees completed work on all inventory items started in January. The cost of this production was transferred to the Finished Goods Inventory account. Determine the cost per unit of product produced in January, assuming that a total of 2,100 units of product were started and completed during the month. 6. The company used an additional $49,700 of direct raw materials and 13,000 hours of direct labor at $6.10 per hour during the remainder of Year 1. Overhead was allocated on the basis of direct labor hours. 7. The company completed work on inventory items started between February 1 and December 31, and the cost of the completed inventory was transferred to the Finished Goods Inventory account. Determine the cost per unit for goods produced between February 1 and December 31, assuming that 28,000 units of inventory were produced. If the company desires to earn a gross profit of $2.60 per unit, what price per unit must it charge for the merchandise sold? 8. The company sold 27,000 units of inventory for cash at $9.90 per unit. Determine the number of units in ending inventory and the cost per unit incurred for this inventory. 9. Actual manufacturing overhead costs paid in cash were $79,700. 10. The company paid $39,300 cash for selling and administrative expenses. 11. Close the Manufacturing Overhead account. 12. Close the revenue and expense accounts. Transactions for the Year 2 Accounting Period 1. The company purchased $58,500 of direct raw materials with cash and used $2,090 of these materials to make products in January 2. Employees provided 1,000 hours of labor at $6.10 per hour during January 3. On January 1, Year 2, Stuart hired a production supervisor at an expected cost of $1,190 cash per month. The company paid cash to purchase $4,660 of manufacturing supplies; it anticipated that $4,295 of these supplies would be used by year-end. Other manufacturing overhead costs (production supplies) were expected to total $78,300. Overhead is applied on the basis of direct labor hours. Stuart expected to use 15,500 hours of direct labor during Year 2. Based on this information, determine the total expected overhead cost for Year 2. Calculate the predetermined overhead rate and apply the overhead cost for the January production. 4. The company recorded a $1,190 cash payment to the production supervisor. 5. The employees completed work on all inventory items started in January. The cost of this production was transferred to the Finished Goods Inventory account. Determine the cost per unit of product produced in January, assuming that 1,900 units of product were started and completed during the month. 6. During February Year 2, the company used $1,425 of raw materials and 1,300 hours of labor at $6.10 per hour. Overhead was allocated on the basis of direct labor hours. 7. The company recorded a $1,190 cash payment to the production supervisor for February 8. The employees completed work on all inventory items started in February, the cost of this production was transferred to the Finished Goods Inventory account. Determine the cost per unit of product produced in February, assuming that 2,300 units of product were started and completed during the month. 9. The company used an additional $53,675 of direct raw materials and 13,500 hours of direct labor at $6.10 per hour during the remainder of Year 2. Overhead was allocated on the basis of direct labor hours. 10. The company recorded $11,900 of cash payments to the production supervisor for work performed between March 1 and December 31 11. The company completed work on inventory items started between March 1 and December 31. The cost of the completed goods was transferred to the Finished Goods Inventory account. Compute the cost per unit of this inventory, assuming that there were 29,000 units of inventory produced. 12. The company sold 31,000 units of product for $10.20 cash per unit. Assume that the company uses the FIFO inventory cost flow method to determine the cost of goods sold. 13. The company paid $41,700 cash for selling and administrative expenses. 14. As of December 31, Year 2, $455 of production supplies was on hand. 15. Actual cost of other manufacturing overhead was $78,300 cash. 16. Close the Manufacturing Overhead account. 17. Close the revenue and expense accounts. 0 0 0 STUART MANUFACTURING COMPANY Schedule of Cost of Goods Manufactured and Sold Year 1 Year 2 Beginning raw materials inventory $ Purchase 58,000 Raw materials available 58,000 Ending raw materials inventory Raw materials used 58,000 Labor Manufacturing overhead Total manufacturing costs 58,000 Beginning work in process inventory 0 Total work in process inventory 58,000 Ending work in process inventory 0 Cost of goods manufactured 58,000 Beginning finished goods inventory Goods available for sale 58,000 Ending finished goods inventory Cost of goods sold $ 58,000 $ 0 0 0 0 0 0 0 $ 0 STUART MANUFACTURING COMPANY Financial Statements Income Statements Year 1 Year 2 267,300 Sales revenue Cost of goods sold Gross margin Selling and administrative expenses 267,300 0 Net income $ 267,300 $ 0 Balance Sheets Assets 219,290 241,670 Cash Production supplies Raw materials inventory Finished goods inventory $ 219,290 $ 241,670 Total assets Equity Common stock Retained earnings 215,000 215,000 Total equity $ 215,000 $ 215,000