Question

Lean Accounting

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $34. The budgeted conversion cost for the year is $165,600 for 2,400 production hours. A unit of Style Omega requires 18 minutes of cell production time. The following transactions took place during June:

1. Materials were acquired to assemble 900 Style Omega units for June.
2. Conversion costs were applied to 900 Style Omega units of production.
3. 840 units of Style Omega were completed in June.
4. 780 units of Style Omega were sold in June for $110 per unit.

a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest cent.
$ per hour

b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest cent.
$ per unit

c. Journalize the summary transactions (1)–(4) for June. If required, round your answers to one decimal place.

1.
2.
3.
4. Sale
4. Cost

Answer 1

Answer
a. Determine the budgeted cell conversion cost per hour.
conversion cost per hour=budgeted conversion cost / production hours =165600 / 2400=$69 Per hr
b . Determine the budgeted cell conversion cost per unit
$ 69 Per hr * 18/60
$ 20.70 per unit

c
Account Title	DR	CR
Raw and in prcess inventory	$     30,600		900*34
Account Payable		$     30,600
Raw and in prcess inventory	$     18,630		900*20.70
Conversion cost		$     18,630
Finshed good Inventory	$     45,948		840*54.70
Raw and in prcess inventory		$     45,948
Account Receivable	$     85,800		780*110
sales		$     85,800
cost of goods sold	$     42,666		780*54.70
Finshed good Inventory		$     42,666
580*58
Direct Material	34
Conversion cost	20.7
conversion cost per uni	54.7