OCIETY Manufacturing Process Information Andrew\'s Airplanes, a corporation, sta
ID: 2447529 • Letter: O
Question
OCIETY Manufacturing Process Information Andrew's Airplanes, a corporation, started a small manufacturing plant that fabricates plastic airplanes The manufacturing process starts by melting the plastic into a semi-liquid state and then pouring the material into a mold press. The final step of the process is to add the three wheels. The resulting airplanes are then sent to quality control and if the inspection is approved, they are transferred to finished goods. This process is completely automated. Direct material, plastic is added 100% a end of the process at the beginning of the process. Wheels are added 1 00% at the Conversion costs are added equally throughout the process. Conversion is 25% complete for the ending inventory work in process and the wheels are 0% complete as to ending inventory At the beginning of the accounting period, Andrew's Airplanes estimated that production would be 150,000 units. Our predetermined factory overhead rate is based on an estimated FOH of $30,000. This information is to be used to determine the application rate for overhead Estimated and actual direct labor costs totaled $88,775 Actual factory overhead costs totaled $27,000 The following information is available concerning direct materials . . Direct Materials-Plastic Beginning Inventory Purchase of Plastic En 0 pounds @ 53.00 per unit 75,000 pounds@53 00 per unit Ending Inventory 5,000 pounds $3.00 per unit One pound of plastic makes 2 plastic airplanes and the company started 140,000 airplanes Direct Materials-Wheels Beginning Inventery Purchases Ending Inventory 0 wheeh @ 02 per wheel 450,000 wheels @ 02 per wheel 60,000 wheels @ 02 per wheel The Work-in-Process account has the following information Beginning Work-in-Process contains O alrplanes Ending Work-in-Process contains 10,000 airplanes The Finished Goods account has the following Information Beginning Finished Goods contains 0 airplanes Ending Finished Goods contains 15,000 airplanes IPaReExplanation / Answer
The following Journal entries could be passed In the Accounts:
Stores Control Account (Plastics) Dr
To Sundry Creditors
(being the entry to account the purchase of 75000 pounds
of plastic @ 3.00 $
225,000
Stores Control Account (Wheels) Dr
To Sundry Creditors A/c
(being the entry to record the purchase of 450,000 @ $ 0.02)
9,000
Wages Control Account Dr
To Bank/cash
(being the entry to record the payment of direct labour)
88,775
Factory Overhead Control A/c Dr
To Bank/Cash A/c
(being the entry to record the incurrence of Overheads)
27,000
Administrative and Selling OH Control A/c Dr
To Bank/ Cash A/c
(being the entry to record the incurring of the OH)
130,000
Work in Process Control A/c Dr
To Stores Control Account (Plastics)
(being the entry to record the consumption of 70000
pounds of plastic @ 3.00)
210,000
Work in Process Control A/c
To Stores Control A/c
(being the entry to account for the consumption of
390,000 wheels @ $0.02 per wheel)
7,800
Work in Process Control A/c Dr
To Wages Control A/c
(being the entry to record the utilisation of direct labour)
88,775
Work in Process Control A/c Dr
To Factory Overhead Control A/c
(being the entry to account for the recovery of FOH @
the absorption rate of $ 0.20 for a full unit--thus for 130,000 units completed and 25% of 10,000 = 132,500 units at 0.20 $)
26,500
Finished Goods A/c Dr
To Work in Process Control A/c
(being the entry to transfer the cost of completed units to
Finished Goods A/c)
Finished Goods Account Dr
To Administrative and Selling Overheads Control A/c
130,000
Cost of Sales A/c
To Finished Goods A/c
(being the entry to transfer the cost of goods sold- 115,000units @ $ 3.43)
394,450
Sundry Debtors A/c
To Cost of Sales A/c
575,000
Cost of Sales A/c
To Profit and Loss A/c
(being the transfer of profit from Cost of Sales Account)
180,550
Profit and Loss A/c Dr
To Provision for Tax
(being the entry to provide for the Tax liability)
54,165
Date Particulars Debit ($) Credit ($)Stores Control Account (Plastics) Dr
To Sundry Creditors
(being the entry to account the purchase of 75000 pounds
of plastic @ 3.00 $
225,000225,000
Stores Control Account (Wheels) Dr
To Sundry Creditors A/c
(being the entry to record the purchase of 450,000 @ $ 0.02)
9,0009,000
Wages Control Account Dr
To Bank/cash
(being the entry to record the payment of direct labour)
88,77588,775
Factory Overhead Control A/c Dr
To Bank/Cash A/c
(being the entry to record the incurrence of Overheads)
27,00027,000
Administrative and Selling OH Control A/c Dr
To Bank/ Cash A/c
(being the entry to record the incurring of the OH)
130,000130,000
Work in Process Control A/c Dr
To Stores Control Account (Plastics)
(being the entry to record the consumption of 70000
pounds of plastic @ 3.00)
210,000210,000
Work in Process Control A/c
To Stores Control A/c
(being the entry to account for the consumption of
390,000 wheels @ $0.02 per wheel)
7,8007,800
Work in Process Control A/c Dr
To Wages Control A/c
(being the entry to record the utilisation of direct labour)
88,77588,775
Work in Process Control A/c Dr
To Factory Overhead Control A/c
(being the entry to account for the recovery of FOH @
the absorption rate of $ 0.20 for a full unit--thus for 130,000 units completed and 25% of 10,000 = 132,500 units at 0.20 $)
26,50026,500
Finished Goods A/c Dr
To Work in Process Control A/c
(being the entry to transfer the cost of completed units to
Finished Goods A/c)
315,900 315,900Finished Goods Account Dr
To Administrative and Selling Overheads Control A/c
130,000130,000
Cost of Sales A/c
To Finished Goods A/c
(being the entry to transfer the cost of goods sold- 115,000units @ $ 3.43)
394,450394,450
Sundry Debtors A/c
To Cost of Sales A/c
575,000575,000
Cost of Sales A/c
To Profit and Loss A/c
(being the transfer of profit from Cost of Sales Account)
180,550
180,550
Profit and Loss A/c Dr
To Provision for Tax
(being the entry to provide for the Tax liability)
54,16554,165
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