Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$218,917 –$16,419 1 25,700 5,985 2 5
1 answer:
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Answer:
1. Purchase materials to manufacture 750 speakers
Debit Raw and In Process Inventory $86,250
Credit Accounts payable $86,250
2. Conversion costs to 715 units
Debit Raw and In Process inventory $64,350
Credit Conversion costs $64,350
3.Completed and transferred 665 units to Finished Goods
Debit Finished Goods Inventory $136,325
Credit Raw and In Process Inventory with $136,325
4. Sales of 655 units
Debit Account receivable $204,360
Credit Sales $204,360
5. Cost of Goods sold - 655 units
Debit Cost of Goods sold $134,275
Credit Finished Goods inventory $134,275
Closing balance of Raw & In process Materials = $14,275
Closing balance of Finished Goods inventory = $2,050
Explanation:
Vintage Audio Inc.
Cell process time = 15 minutes per speaker
Conversion cost for 165 operating hours = $59,400.
Units produced in 165 hours = (165hrs x 60mins) / 15
= 660 units
Conversion costs per Unit = $59,400 / 660 units = $90
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