Pages 1 & 2 are complete. Need help on the remaining pages
ACC 1820 Project 3 (F21)Name Tarchella Emmanuel Overview: The connect question addresses the calculations to determine the amount of costs to be transferred from the first of two production departments into the second department. The first production department includes only two cost categories. Costs for the second of two production departments are calculated based on relationships to the first department costs. Once the cost inputs for the second production department are determined, the process cost summary for June is completed to determine the costs to be transferred to finished goods inventory. The project summarizes the accounting for transactions for both departments, including Journal entries and T account postings. Accounting is included for the sale of this inventory and analyzed using various financial statement analysis ratios. The potential impact to the financial statements is explored regarding utilization of incorrect percentage of completion estimates in the calculation. Use the provided information and your work from Questions 8 HW3.1 for Sunspot Beverages to complete the requirements for the project. Remember that Sunspot Beverages manufactures a product in two departments, Blending and Bottling. The company uses TWO Work-in-Process inventory accounts to track costs for each department. Once the product is completed in the Blending department, costs are transferred out of WIP-Blending and into WIP-Bottling. ROUND ALL NUMBERS TO WHOLE DOLLARS UNLESS OTHERWISE INSTRUCTED 1) Calculating Information to use for Second Department: The analysis you completed on connect for Sunspot Beverages relates to their FIRST department- Blending. We will use information from this department to calculate values for you to use in the SECOND department – Bottling later in the project. a) Units: Include the number of units in beginning and ending inventory for the Blending department in the table below – Blending column. (These can be found in the paragraph of given information of Question 8 on HW3.1) . Multiply the units by the “factors” provided in the table to calculate the number of units for Bottling’s beginning and ending inventory. Units in WIP-Bottling Blending (connect) Factor (multiply) Bottling Beginning # of units 62,000 1.20 74,400 Ending # of units 72,000 0.80 57,600 b) Beginning Inventory Costs for Bottling: The Bottling department will have 4 categories of costs for its process costing calculations; Blending Costs (transferred in from first department), Bottling costs (one category of direct material), Other direct material (a 2nd category of direct material) and Conversion costs (category combining direct labor and overhead). Sunspot Beverages treats the costs of bottles as a separate cost category. These are added to production at the beginning of the production process. For the cost in the Bottling department’s beginning inventory, use the BEGINNING costs for material and conversion from the Blending department (connect) and the factors provided below to calculate the “other direct material” and conversion costs in beginning inventory for Bottling department. Add all cost categories together for the “Total Costs”. These amounts should be the beginning balance in the T accounts at the top of the project. Costs in Beginning WIP-Bottling Blending Cost Category Blending Costs (connect) Factor (multiply) Bottling Cost Category Category Costs in Beginning WIP Use in 3a N/A N/A given value Blending $ 90,000 N/A N/A given value Bottling 45,000 Direct Material Costs 22,100 4 Other DM 88,400 Conversion Costs 7,600 6 Conversion 45,600 Total Costs 29,700 269,000 c) Costs Added (increases) to Bottling department: Include the amount from your Q8 “costs for units completed and transferred out” as “blending costs (transferred IN) in the far-right column. Use the direct material costs ADDED during June for the first department to calculate BOTH the Bottling costs and Other DM costs added in June for the second department-Bottling (use the respective “factors”.) Use the conversion costs added in June for the first department (Blending Department) to calculate the conversion cost for the second department (Bottling Department) Costs Added/Incurred in WIP-Bottling Blending Cost Category Blending Costs (connect) Factor (multiply) Cost Category WIP-Bottling Costs Incurred Use in 3a “transferred OUT” N/A Blending (trans IN) 379,440 Direct Material Costs 237,100 1.2 Bottling 284,520 Direct Material Costs 237,100 2.4 Other DM 569,040 Conversion Costs 160,880 3.4 Conversion 546,992 Total Costs Added/Incurred 1,779,992 Note: This is your Check Point. You can text or email the tables above to Teri to ensure you are headed in the correct direction. Use these Inventory T-accounts for Sunspot Beverages for June as directed in the requirements below. Note - These T accounts will not be complete until you reach requirement 5c of the project. WIP-Blending WIP-Bottling Raw Material Inventory Finished Goods Inventory Bal 6/1 220,000 Bal 6/1 -0- Bal 6/30 150,000 Bal 6/30 -0- 2) Accounting for added costs (journal entries and T accounts): Using the information on connect and above complete the following: Remember, Sunspot Company has TWO production departments; BLENDING department (process cost summary prepared on connect) and BOTTLING department (process cost summary will be prepared in 3 of the Project). Use Q1 and 2 of HW3.1 as a reference/example regarding journal entry format. a) Include June’s beginning account balance for WIP-Blending and WIP-Bottling (totals from table in 1b) in the T accounts at the top of the project. b) Raw material requests are made for direct material to the Blending Department, “other direct material” and “Bottling” for the Bottling Department. Write the journal entry to record the raw material requested and charged (added/incurred/used) to BOTH the departments during June. Note – This can be written as one compound journal entry or as three separate journal entries (one for each cost category). c) Conversion costs is the combination of direct labor and factory overhead. Assume the conversion costs (use amounts from 1c—for each department) consists of 45% direct labor and the remainder is factory overhead. There is no indirect labor for Sunspot Beverages Write the journal entry to record the direct labor incurred (charged/added) to BOTH departments in June. d) Write the journal entry to record the overhead applied (charged/added) to BOTH departments for June. (55% of conversion costs). e) Write the journal entry to transfer the costs out of the Blending Department and into the Bottling department. Use the amount calculated for your Q8 from HW3.1 requirement 5. f) Post ALL the journal entries from above to the T-accounts at the top of the project. g) Determine the ending balance for WIP-Blending. The ending balance should equal the dollar value in the row “total cost of ending work in process” as calculated in Question 8 requirement 5. Check that it does. h) Notice that the Raw Material Inventory account has a beginning and ending balance provided; $220,000 and $150,000, respectively. Calculate the amount of raw material that would have been purchased to increase the account using the T account logic: Beginning + Increases – Decreases = Ending. Write the journal entry assuming these purchases were made on account. 3) Percentage complete for 2nd Department-Bottling: The table below summarizes the percentage completion for each cost category. Use these percentages in the process costing calculations for the Bottling department. Bottling – estimated completion percentages Cost Category % complete on June 1 % complete on June 31 Blending 100% 100% Bottling 100% 100% Other Direct Material 65% 50% Conversion 85% 60% a) Total Costs to account for: Summarize the cost information (DOLLARS) from 1b and 1c by cost category. For the calculation for the 2nd department, Bottling Department, columns have been added to right of the total for each category. The first column, “Total”, should equal the sum of all the column to the right. Make sure you complete only the light blue cells. This table is similar to the TOP half of the “Cost Reconciliation” in requirement 5 of HW Q8. Note – This is for the BOTTLING department. The column labeled “Blending” refers to the cost category (blending costs transferred into the Bottling department). The column labeled “Bottling” refers to the cost category (bottling costs incurred in the Bottling department) Bottling – Total Costs to account for: Total Costs Blending Costs Bottling Costs Other DM Costs Conversion Costs Beginning Work-in-Process ($ value from 1b) Costs incurred (Total costs from 1c) Total Costs to account for b) Unit Reconciliation: Accounting for Physical Units: Complete the unit reconciliation for the Bottling department using the information from 1a. Note –The number of units transferred OUT of Blending (connect) and INTO Bottling can be obtained from your work in connect. Bottling – Physical Unit Reconciliation # of units in Beginning Work-in-Process (from 1a Bottling column) # of Units transferred from Blending Department (from connect) Total units to account for # of Units completed and transferred to finished Goods Inventory (**) Use in 3c # of Units in ending Work-in-Process (from 1a Bottling column) Use in 3c Total units accounted for (**) Calculate as Total units – units in ending inventory. Remember Total units “to account for” will equal total “accounted for” c) Equivalent units of production: In order to show your work, separate rows have been provided to show equivalent units for “units completed and transferred out” and “ending work-in-process”. Adding the two together give “total equivalent units of production”. Columns are provided for each cost category but no total column because a total would be inappropriate. Bottling Department: Equivalent units of production (EUP)- weighted average method Blending Bottling Other DM Conversion Units completed and transferred out (from 3b) Equivalent units in ending work-in-process (from 3b x % complete) Total equivalent units of production d) Costs per Equivalent unit of production (CPEUP): Use the “costs to account for” from 3b and the equivalent units from 3c to calculate the average “cost per equivalent unit of production”. This is similar to Requirement 2 of HW3.1 Q8. Show 4 decimals. Bottling Department: Cost per Equivalent units of production (CPEUP)- weighted average method Blending Bottling Other DM Conversion Costs to account for (3b) Total