Question

Lean Accounting

Com-Tel Inc. manufactures and assembles two models of smartphones-the Tiger Model and the Lion Model. The process consists of a lean cell for each product. The data that follow concern only the Lion Model lean cell.

For the year, Com-Tel Inc. budgeted these costs for the Lion Model production cell:

Conversion Cost Categories		Budget
Labor		$71,300
Supplies		27,000
Utilities		9,700
Total		$108,000

Com-Tel plans 2,000 hours of production for the Lion Model cell for the year. The materials cost is $46 per unit. Each assembly requires 15 minutes of cell assembly time. There was no May 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.

The following summary events took place in the Lion Model cell during May:

Electronic parts were purchased to produce 6,800 Lion Model assemblies in May.

Conversion costs were applied for 6,450 units of production in May.

6,320 units were completed and transferred to finished goods in May.

6,130 units were shipped to customers at a price of $216 per unit.

If required, round your answers to the nearest cent.

Required:

1. Determine the budgeted cell conversion cost per hour.
$ per hour

2. Determine the budgeted cell conversion cost per unit.
$ per unit

3. Journalize the summary transactions (a) through (d).

b.
c.
d. Sale
d. Cost

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

Raw and In Process Inventory	$
Finished Goods Inventory	$

5. Lean accounting is different from traditional accounting because it is more (complex or simplied?) and uses ( maximum or minimal?? control. As a result, the number of transactions are (increased or reduced?? . In many lean operations, purchased materials are charged to a (raw and in process inventory account or materials and indirect labor account?? . Direct labor is frequently (included as a conversion cost of the cell or disregarded in the cost allocation process?? . Often, nonfinancial performance measures, such as , are used to monitor performance.

Answer 1

1
Budgeted cell conversion cost per hour	54	per hour	=108000/2000
2
Budgeted cell conversion cost per unit	14	per unit	=54*(15/60)
3
Raw and in process inventory	312800		=6800*46
Accounts Payable		312800
Raw and in process inventory	90300		=6450*14
Conversion costs		90300
Finished goods inventory	379200		=6320*(46+14)
Raw and in process inventory		379200
Accounts Receivable	1324080		=6130*216
Sales		1324080
Cost of goods sold	367800		=6130*(46+14)
Finished goods inventory		367800
4
Raw and In Process Inventory	23900		=312800+90300-379200
Finished Goods Inventory	11400		=379200-367800
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.