80.2K

Verified Solution

Link Copied!

Tel Inc. is a small company that manufactures one type of high-definition (HD) antenna

for residential use inside a dwelling for HD radio and TV reception. Each HD antenna is

made up of five components:

two antenna receptors,

one electronic circuit component,

one plastic housing,

one plastic dial, and

one wire connector.

All five components are purchased from suppliers and assembled at Tel Inc.The HD

antenna retails for $59. Your brother, Tel Lisonski, began the company just over two

years ago. It is a small company employing five people (not including Tel). The company

operates in a predominately noncomputer-integrated manufacturing environment.

Unfortunately, last night a violent thunderstorm moved through the area and lightning

struck the small building where Tel. Inc. operates. An intense fire resulted, destroying

much of the plant. Your brother Tel was devastated and has contacted you to help assist

him in organizing, preparing, and analyzing his financial information for the third quarter

(just ended) of 2019.

Here's what is known:

The following is a list of associated costs charged by suppliers to Tel Inc. regarding the

five components:

two antenna receptors @ $3.60 per receptor,

one electronic circuit component @ $21 per unit,

one plastic housing @ $6.50 per unit,

one plastic dial @ $1 per unit, and

one wire connector @ $2.25 per unit.

Projected sales of Tel Inc.'s HD antennas are: $1,062,000; $1,239,000; $1,652,000;

$1,740,500; and $1,504,500 for the months of June, July, August, September, and

October, respectively. Tel Inc. has a strict policy of requiring a monthly ending direct

materials inventory (in units) sufficient to assemble an amount of HD antennas equal to

10% of the next month's projected sales (in units of HD antennas). Actual third quarter

sales (in units) were 90% of projected third quarter sales (in units). The company has a

strict policy of maintaining a monthly ending finished goods inventory equal to 5% of

that month's projected sales (in units).

Practically, all time card records and associated payroll cost data were destroyed, so Tel

recommends using the following standards for labour payroll costs as a substitute for

actual labour payroll costs:

Penneyoffice manager: $50,000 annual salary

Ryanassembler of antennas: $14 per hour

Darrylassembler of antennas: $14 per hour

Devonsales associate: $100,000 per year plus 0.5% of gross sales

Keithmaintenance and custodial care of plant: $15 per hour

All plant employees work thirty-five hours per week. Assume each month has four

weeks. Actual evidence of a total overtime premium paid to plant employees amounted to

$9,000 during the third quarter of 2019. Other various costs that were determined

include:

Lease for plant building (annual) $18,720

Lease for administrative office space (monthly) $700

Lease for plant equipment (annual) $15,664

Total insurance premiumplant & office (annual) $7,600

Plant insurance (Annual plant insurance is 85% of the total annual insurance

premium.)

Property taxes for administrative office paid by lessor (quarterly) $400

Property taxes for plantpaid by lessee (quarterly) $650

Utilities for plantheat, light, and power (quarterly) $3,500

Supplies for plantlubricants, coolants, oil, etc. (quarterly) $8,500

Miscellaneous costsplant (quarterly) $7,200

Miscellaneous costsadministrative office (quarterly) $46,000

Customer service (quarterly) $88,000

Advertising (quarterly) $15,000

Housekeeping costsadministrative office (monthly) $650

Assume zero work in process.

Manufacturing cost per finished unit of the HD antenna for the second quarter of 2019

was $38.

Tel Inc. follows an inventory policy that requires the first units produced are the first

units sold.

Assume a 40% tax rate and interest expense for the third quarter amounting to $16,800.

Tel Inc.'s fiscal year follows the calendar year.

Required:

For the following numeric questions, all amounts should be rounded to the nearest whole

dollar where applicable.

1. Determine:

a) Beginning direct materials inventory in dollars for the third quarter of 2019.

b) Ending direct materials inventory in dollars for the third quarter of 2019.

c) The amount of HD antennas (in units) manufactured in the third quarter of 2019.

d) Direct materials used in manufacturing (in dollars) in the third quarter of 2019.

e) Purchases of direct materials (in dollars) in the third quarter of 2019.

2. cost of goods manufactured statement for Tel Inc. (in proper format) for the

third quarter of 2019.

Using purchase budget

Answer & Explanation Solved by verified expert

See Answer