Question

Lean Accounting

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $32. The budgeted conversion cost for the year is $81,000 for 1,500 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 690 Style Omega units for June.
2. Conversion costs were applied to 690 Style Omega units of production.
3. 640 units of Style Omega were completed in June.
4. 600 units of Style Omega were sold in June for $90 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. If an amount box does not require an entry, leave it blank.

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

Answer 1

Answer
ans a
	Budgeted cell conversion cost per hour
	81000/1500	$54	per hour
	ans b
	Conversion cost per unit	$16	per unit
	54*18/60
	ans c
Tran	Accounts title	Dr	Cr
1	Work In process Inventory	$     22,080
	Raw material (690*32)		$     22,080
2	Work In process Inventory	$     10,240
	Conversion cost		$     10,240
	(640*16)
3	Finished Goods Inventory	$     30,720
	Work In process Inventory		$     30,720
	640*(32+16)
4	Accounts receivable (600*90)	$     54,000
	Sales		$     54,000
	Cost of good sold	$     28,800
	Finished Goods Inventory		$     28,800
	600*(32+16)