Question

In: Accounting

Lean Accounting Westgate Inc. uses a lean manufacturing strategy to manufacture DVR (digital video recorder) players....

Lean Accounting

Westgate Inc. uses a lean manufacturing strategy to manufacture DVR (digital video recorder) players. The company manufactures DVR players through a single product cell. The budgeted conversion cost for the year is $802,200 for 1,910 production hours. Each unit requires 20 minutes of cell process time. During March, 950 DVR players were manufactured in the cell. The materials cost per unit is $69. The following summary transactions took place during March:

Materials were purchased for March production.

Conversion costs were applied to production.

950 DVR players were assembled and placed in finished goods.

900 DVR players were sold for $370 per unit.

a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest dollar.
$ per hour

b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest dollar.
$ per unit

c. Journalize the summary transactions (1)–(4) for March.

1.
2.
3.
4. Sale
4. Cost

Solutions

Expert Solution

Solution a:

Budgeted cell conversion cost per hour = $802,200 / 1910 = $420 per hour

Solution b:

budgeted cell conversion cost per unit = $420 * 20/60 = $140 per unit

Solution c:

Journal Entries - Westgate Inc.
Event Particulars Debit Credit
1 Raw and In Process Inventory Dr $65,550.00
       To Accounts payable $65,550.00
(To record material purchased on account)
2 Raw and In Process Inventory Dr (950*$140) $133,000.00
       To Conversion cost $133,000.00
(Being conversion cost applied)
3 Finished goods inventory Dr $198,550.00
       To Raw and In Process Inventory $198,550.00
(Being completed units transferred to finished goods)
4a Accounts receivables Dr $333,000.00
       To Sales revenue $333,000.00
(To record sales on account)
4b Cost of goods sold Dr (900*$209) $188,100.00
       To Finished goods inventory $188,100.00
(To record cost of goods sold)

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