In: 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 | $113,300 | ||
Supplies | 42,900 | ||
Utilities | 15,400 | ||
Total | $171,600 |
Com-Tel plans 2,200 hours of production for the Lion Model cell for the year. The materials cost is $66 per unit. Each assembly requires 20 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:
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). If an amount box does not require an entry, leave it blank.
a. | |||
b. | |||
3. | |||
4. Sale | |||
4. 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 and uses control. As a result, the number of transactions are . In many lean operations, purchased materials are charged to a . Direct labor is . Often, nonfinancial performance measures, such as , are used to monitor performance.
1 | |||
Budgeted cell conversion cost per hour | 78 | per hour | =171600/2200 |
2 | |||
Budgeted cell conversion cost per unit | 26 | per unit | =78*(20/60) |
3 | |||
Raw and in process inventory | 495000 | =7500*66 | |
Accounts Payable | 495000 | ||
Raw and in process inventory | 557700 | =7150*78 | |
Conversion costs | 557700 | ||
Finished goods inventory | 1009440 | =7010*(66+78) | |
Raw and in process inventory | 1009440 | ||
Accounts Receivable | 2121600 | =6800*312 | |
Sales | 2121600 | ||
Cost of goods sold | 979200 | =6800*(66+78) | |
Finished goods inventory | 979200 | ||
4 | |||
Raw and In Process Inventory | 43260 | =495000+557700-1009440 | |
Finished Goods Inventory | 30240 | =1009440-979200 | |
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. |