Question

Vintage Audio Inc. manufactures audio speakers. Each speaker requires $127 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:

Speaker assembly cell, estimated costs:
Labor $45,050
Depreciation 6,040
Supplies 2,200
Power 1,655
Total cell costs for the period $54,945
The operating plan calls for 185 operating hours for the period. Each speaker requires 20 minutes of cell process time. The unit selling price for each speaker is $344. During the period, the following transactions occurred:
Purchased materials to produce 530 speaker units.
Applied conversion costs to production of 505 speaker units.
Completed and transferred 480 speaker units to finished goods.
Sold 460 speaker units.
There were no inventories at the beginning of the period.
a. Journalize the summary transactions (1)-(4) for the period. Do not round interim calculations.
1.
2.
3.
4. Sale
4. Cost
b. Determine the ending balance of raw and in process inventory and finished goods inventory.
Raw and In Process Inventory, ending balance $
Finished Goods Inventory, ending balance $

Answer 1

A.1.

Dr Raw and In Process Inventory 67,310

Cr Accounts Payable 67,310

2

Dr Raw and In Process Inventory 49,995

Cr Conversion cost 49,995

3

Dr Finished goods inventory 108,480

Cr Raw and In Process Inventory 108,480

4a

Dr Accounts receivables 158,240

Cr Sales 158,240

4b

Dr Cost of goods sold 103,960

Cr Finished goods inventory 103,960

b.

Raw and In Process Inventory, ending balance

=$3,540

Finished Goods Inventory, ending balance

= $4520

Step-by-step explanation:

Solution a:

Budgeted conversion cost per unit =

$54,945 / 185 *20/60

=$297*20/60

= $99 per unit

Vintage Audio Inc. Journal Entries

1.

Dr Raw and In Process Inventory 67,310

Cr Accounts Payable 67,310

(530*$127)

2

Dr Raw and In Process Inventory 49,995

Cr Conversion cost 49,995

(505*$99)

3

Dr Finished goods inventory 108,480

(480*$226)

Cr Raw and In Process Inventory 108,480

4a

Dr Accounts receivables 158,240

(460*$344)

Cr Sales 158,240

4b

Dr Cost of goods sold 103,960

(460*$226)

Cr Finished goods inventory 103,960

b.

Raw and In Process Inventory, ending balance =$54,945+$49,995-$108,480

=$3,540

Finished Goods Inventory, ending balance

$108,480-103,960

= $4520