Question

Grand Prix Displays Inc. manufactures and assembles automobile instrument panels for both Yokohama Motors and Detroit Motors. The process consists of a lean product cell for each customer’s instrument assembly. The data that follow concern only the Yokohama lean cell.

For the year, Grand Prix Displays Inc. budgeted the following costs for the Yokohama production cell:

1	Conversion Cost Categories	Budget
2	Labor	$585,000.00
3	Supplies	45,000.00
4	Utilities	30,000.00
5	Total	$660,000.00

Grand Prix Displays Inc. plans 2,200 hours of production for the Yokohama cell for the year. The materials cost is $180 per instrument assembly. Each assembly requires 15 minutes of cell assembly time. There was no November 1 inventory for either Raw and In Process Inventory or Finished Goods Inventory.

The following summary events took place in the Yokohama cell during November:

Nov.	4	Electronic parts and wiring were purchased to produce 9,000 instrument assemblies in November.
	6	Conversion costs were applied for the production of 8,800 units in November.
	24	8,650 units were started, completed, and transferred to finished goods in November.
	29	8,600 units were shipped to customers at a price of $400 per unit.
	Required:
1.	Determine the budgeted cell conversion cost per hour.
2.	Determine the budgeted cell conversion cost per unit.
3.	Journalize the summary transactions for November. 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?

CHART OF ACCOUNTS
Grand Prix Displays 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

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 for November. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

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.

Answer 1

Solution 1:

budgeted cell conversion cost per hour = Budgeted conversion cost / Budgeted labor hours = $660,000.00 / 2200 = $ 300

Solution 2:

budgeted cell conversion cost per unit = Conversion cost per hour * conversion time per unit = $ 300 x 15/60 = $ 75

Solution 3:

Date	Particulars	Debit	Credit
4-Nov	Raw and In Process Inventory Dr	$1,620,000.00
	To Accounts Payable (9000*$180)		$1,620,000.00
6-Nov	Raw and In Process Inventory Dr	$660,000.00
	To Conversion cost (8800*$75)		$660,000.00
24-Nov	Finished goods inventory Dr (8650 * $275)	$2,378,750.00
	To Raw and In Process Inventory		$2,378,750.00
29-Nov	Accounts receivables Dr (8600*$400)	$3,440,000.00
	To Sales		$3,440,000.00
29-Nov	Cost of goods sold Dr (8600*$275)	$2,365,000.00
	To Fininshed goods invenotry		$2,365,000.00

Solution 4:

Ending balance of Raw and in process inventory =

$1,620,000.00 + $660,000 - $ 2205750 = $ 74250 Ending balance of finished goods inventory = $2,205,750.00 - $ 2193000 = $ 12750

An expert is allowed to answer initial 3 sub parts in case of multi part questions, Hence solved 1-4. Please appreicate the efforts and give a thumbs up. Thanks