I need to prepare an equivalent units schedule but I am completely lost. These is the information provided.
Direct Materials
Paper added 100% at the beginning of the process
Binding is added 100% as the last step in manufacturing process.
Conversion costs
Direct labor and factory overhead are added equally throughout the process.
At the beginning of the accounting period, it is estimated that production will be 60,000 practice sets. Estimated factory over head for the period is $30,000. This information is to be used to determine the application rate for the factory overhead.
Direct Materials
Purchase of paper 12,000 reams @ $3.00 a ream
Each ream contains 500 sheets of paper and each practice set contains 100 sheets of paper.
The company start printing of 55,00 practice sets
Purchase of 60,000 units of binding @ $.15
Used 46,000 units of bindings this period
Estimated and actual factory overhead costs totaled $27,000
Ending work in process is 100% complete as to paper
25% complete as to conversion costs
0% complete as to binding
The finished good inventory at Jan 1, 2012 had a balance of 30,000 practice sets and at December 31, 2012 had an ending balance of 40,000 practice sets.
The selling price of each practice set ins $10.00
Assume all materials purchased and sales were made on account.
Assume all other transactions were on the cash basis
Operating expenses this period totaled $80,000.
Also I need to create the necessary journal entries related to the manufacturing cycle for this accounting period.