Question

The annual budgeted conversion costs for a lean cell are $267,300 for 3,300 production hours. Each unit produced by the cell requires 12 minutes of cell process time. During the month, 1,250 units are manufactured in the cell. The estimated materials costs are $80 per unit.

(Round the per unit cost to the nearest cent and use in subsequent computations. If required, round your answers to the nearest dollar.)

Journalize the following entries for the month:

a. Materials are purchased to produce 1,320 units.

b. Conversion costs are applied to 1,250 units of production.

c. The cell completes 1,190 units, which are placed into finished goods.

If an amount box does not require an entry, leave it blank.

a.
b.
c.

Answer 1

a. Materials are purchased to produce 1,320 units.

Date	Account Title	Debit ($)	Credit ($)
	Raw and In Process Inventory	105,600
	Accounts Payable		105,600
	(purchase of goodson account)

workings:

Raw and In Process Inventory= cost per unit * number of units

=$80 * 1,320 units

=$ 105,600

b. Conversion costs are applied to 1,250 units of production.

Date	Account Title	Debit ($)	Credit ($)
	Raw and In Process Inventory	20,250
	Conversion Costs		20,250
	(conversion cost involved in production)

workings:

Conversion Costs Rate = $ 267,300/ 3300= $ 81 per hour

No of hours required for 1,250 units = 12 * 1,250/60= 15,000/60= 250 hours

Conversion Costs for 1,250 units = $81 *250= $ 20,250

c. The cell completes 1,190 units, which are placed into finished goods.

Date	Account Title	Debit ($)	Credit ($)
	Finished Goods Inventory	114,478
	Raw and In Process Inventory		114,478
	(completed units transfered to Finished Goods Inventory)

working:

Materials = 1,190 * $80= $ 95,200

Conversion Costs = 1,190 units * 12 mins /60= 238 hours * $ 81= $ 19,278

TOTAL =Materials + Conversion Costs

=$ 95,200 + $ 19,278

=$ 114,478