Question

Dashboard Inc. manufactures and assembles automobile instrument panels for both eCar Motors and Greenville Motors. The process consists of a lean product cell for each customer’s instrument assembly. The data that follow concern only the eCar lean cell.

For the year, Dashboard Inc. budgeted the following costs for the eCar production cell:

1	Conversion Cost Categories	Budget
2	Labor	$596,000.00
3	Supplies	42,000.00
4	Utilities	29,000.00
5	Total	$667,000.00

Dashboard Inc. plans 2,300 hours of production for the eCar cell for the year. The materials cost is $200 per instrument assembly. Each assembly requires 15 minutes of cell assembly time. There was no April 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.

The following summary events took place in the eCar cell during April:

a.	Electronic parts and wiring were purchased to produce 8,800 instrument assemblies in April.
b.	Conversion costs were applied for the production of 8,600 units in April.
c.	8,500 units were started, completed, and transferred to finished goods in April.
d.	8,450 units were shipped to customers at a price of $430 per unit.

	Required:
1.	Determine the budgeted cell conversion cost per hour.
2.	Determine the budgeted cell conversion cost per unit. If required, round your answer to the nearest whole dollar.
3.	Journalize the summary transactions (a) through (d). Refer to the Chart of Accounts for exact wording of account titles.
4.	Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.
5.	How does the accounting in a lean environment differ from traditional accounting?

1. Determine the budgeted cell conversion cost per hour.

per hour

2. Determine the budgeted cell conversion cost per unit. If required, round your answer to the nearest whole dollar.

per unit

3. Journalize the summary transactions for April 30. Refer to the Chart of Accounts for exact wording of account titles.

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8
9
10

4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.

Raw and In Process Inventory
Finished Goods Inventory

5. How does the accounting in a lean environment differ from traditional accounting?

Lean accounting is different from traditional accounting because it is more     and uses     control. As a result, the number of transactions are   . In many lean operations purchased materials are charged to a   . Direct labor is frequently   . Often, nonfinancial performance measures, such as   , are used to monitor performance.

CHART OF ACCOUNTSDashboard Inc.General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
125	Notes Receivable
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
150	Raw and In Process Inventory
151	Finished Goods Inventory
180	Land
190	Equipment
191	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
216	Salaries Payable
218	Sales Tax Payable
219	Customers Refunds Payable
221	Notes Payable

	EQUITY
31	Common Stock
32	Retained Earnings
33	Dividends
34	Income Summary

	REVENUE
410	Sales

	EXPENSES
510	Cost of Goods Sold
511	Conversion Costs
521	Advertising Expense
523	Depreciation Expense-Equipment
526	Salaries Expense
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

Answer 1

1) Budgeted Cell Conversion Cost Rate = Budgeted Cost/Hours of Production
Budgeted Cell Conversion Cost Rate = $667,000/2300 hours	290	per hour
2) Budgeted Cell Conversion Cost per Unit $290 per hr x (15 min. ÷ 60 min.)	72.5	Per unit
3)
Journal Entries
Nov.2	Debit	Credit
Raw and In Process Inventory	$1,760,000.00
Accounts Payable (8800 units x $200)		$1,760,000.00
Nov.6
Raw and In Process Inventory	$   623,500.00
Conversion Cost (8600 units x $72.5)		$   623,500.00
Nov. 24
Finished Goods Inventory	$2,316,250.00
Raw and In Process Inventory (8500 units x ($200 + $72.50)	$2,316,250.00
Nov.29
Accounts Receivable (8450 units x $430)	$3,633,500.00
Sales		$3,633,500.00
Cost of Goods Sold	$2,302,625.00
Finished Goods Inventory (8450 units x ($200 + $72.5)	$2,302,625.00
4)
Ending balance in Raw and In Process Inventory
$1,760,000 + $623,500 - $2316250	$     67,250.00
Ending Balance in Finished Goods Inventory
$2316250 - $2302625	$     13,625.00
5)
Lean accounting is different from traditional accounting because it is more simplified and uses minimal control. As a result, the number of transactions are reduced . In many lean operations, purchased materials are charged to a "raw and in process inventory" account Direct labor is frequently included as a conversion cost of the cell . Often, nonfinancial performance measures, such as lead time or quality measures are used to monitor performance