In: Accounting
Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $125. The budgeted conversion cost for the year is $171,600 for 1,950 production hours. A unit of Style Omega requires 15 minutes of cell production time. The following transactions took place during June:
1. | Materials were acquired to assemble 650 Style Omega units for June. |
2. | Conversion costs were applied to 650 Style Omega units of production. |
3. | 635 units of Style Omega were completed in June. |
4. | 610 units of Style Omega were sold in June for $177 per unit. |
Required: | |
a. | Determine the budgeted cell conversion cost per hour. |
b. | Determine the budgeted cell conversion cost per unit. |
c. | Journalize the summary transactions (1)-(4) for June. Refer to the Chart of Accounts for exact wording of account titles. |
Answer | |||
a |
|||
Budgeted cell conversion cost per hour | 88 | per hour | 171600/1950 |
b | |||
Budgeted cell conversion cost per unit | 22 | per unit | 88*(15/60) |
c | |||
Accounts title | Debit | Credit | |
Raw and in process inventory | $ 81,250 | 650*125 | |
Accounts Payable | $ 81,250 | ||
Raw and in process inventory | $ 14,300 | 650*22 | |
Conversion costs | $ 14,300 | ||
Finished goods inventory | $ 93,345 | 635*(125+22) | |
Raw and in process inventory | $ 93,345 | ||
Accounts Receivable | $ 107,970 | 610*177 | |
Sales | $ 107,970 | ||
Cost of goods sold | $ 89,670 | 610*(125+22) | |
Finished goods inventory | $ 89,670 |