The purpose is to Prepare an equivalent unit schedule, Unit cost and total costs for plastic, audio$/$electronic devices and conversion costs

Prepare a Cost of Production Report Prepare an Income Statement Write the Journal Entries for Megans's Mugs report.

For that Complete the following requirements:

$1.$Determine the predetermined overhead rate.

$2.$Determine the total number of ceramic mugs to account for.

$3.$ Prepare an equivalent unit's schedule:

The schedule format should include:

Whole Units $($Actual$)$

Equivalent Units

Direct Materials $-$ Ceramic clay

Direct Materials $-$ Decals

Conversion Costs

Stages: Beginning, Start$/$Completed$,$ Completed$/$Transferred Out, Ending

Manufacturing Process Information:

Megan's Mugs is a corporation that started a small manufacturing plant to fabricate mugs.

The manufacturing process:

Begins by placing ceramic clay in molds.

Molds are fired in a kiln, then cooled and unmolded.

Inspected mugs are designed with a decal.

Mugs are then transferred to finished goods.

The process is completely automated.

Direct material ceramic clay is added $100\%$ at the beginning.

Decals are added $100\%$ at the end.

Conversion costs are added equally throughout the process.

Conversion is $25\%$ complete for the ending inventory work in process, and decals are $0\%$ complete in ending inventory.

Estimated production for the accounting period: $100,000$ cups.

Predetermined factory overhead rate: Based on an estimated FOH of $$6,000.$

Estimated and actual direct labor costs totaled $$31,030.$

Actual factory overhead costs totaled $$5,600.$

Direct Materials Information:

Direct Materials $-$ Ceramic Clay:

Beginning Inventory: $0$ pounds @ $$1\mathrm{.}60$ per pound

Purchase of Ceramic Clay: $40,000$ pounds @ $$1\mathrm{.}60$ per pound

Ending Inventory: $12,500$ pounds @ $$1\mathrm{.}60$ per pound

Each mug contains four ounces of ceramic clay. $(16$ ounces in a pound$)$

Direct Materials $-$ Decals:

Beginning Inventory: $0$ decals @ $$0\mathrm{.}05$ per decal

Purchases: $150,000$ decals @ $$0\mathrm{.}05$ per decal

Ending Inventory: $44,000$ decals @ $$0\mathrm{.}05$ per decal

$106,000$ decals were used during this period.

Work$-$in$-$Process $($WIP$)$ Account:

Beginning WIP: Contains zero mugs.

Ending WIP: Contains $4,000$ mugs.

Finished Goods Account:

Beginning Finished Goods: Contains $200,000$ mugs.

Ending Finished Goods: Contains $100,000$ mugs at $$0\mathrm{.}90$ each.

Other Financial Information:

Selling price per mug: $$2\mathrm{.}50.$

Selling and Administrative Costs totaled $$80,000.$

Tax rate: $30\%.$

STEPS FOR PART $2$

Step $1$: Determine the predetermined OH rate

Step $2$: Determine the total number of mugs to account for

Step $3$: Determine the Equivalent Units Schedule

Step $4$: Determine the total costs for the ceramic clay and the unit ceramic cost per mug

Step $5$: Determine the total costs for the decals and the unit decal cost per mug

Step $6$: Determine the total conversion cost and the conversion cost per mug using the predetermined rate

Step $7$: Determine the total equivalent cost per mug

Step $8$: Prepare a Cost of Production Report

Turn the equivalent unit schedule into dollars.

Use FIFO costing.

Step $9$: Determine the amounts for the following:

Ending WIP in Units and Dollars

Ending Finished Goods Inventory in Units and Dollars

COGS calculation

Over$/$Under Applied FOH

Income Statement showing Gross Margin, Income before taxes, Tax Amount, and Net Income

Step $10$: Prepare the necessary Journal Entries related to the manufacturing cycle for this accounting period,

Use the Chart of Account numbers for the journal entries.

Record transactions such as: Purchase of Clay and Decals using cash, Transfer of materials $($Clay and Decals$)$ to WIP, Record direct labor in WIP using Wages Payable, Record applied FOH, Record actual FOH using cash, Record over or under applied FOH, Record the sale of goods on account along with the cost of the inventory that was sold. Record the sale first, then the COGS entry.