Lean Accounting Vintage Audio Inc. manufactures audio speakers. Each speaker req

Question

Lean Accounting

Vintage Audio Inc. manufactures audio speakers. Each speaker requires $48 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:

The operating plan calls for 800 operating hours for the period. Each speaker requires 24 minutes of cell process time. The unit selling price for each speaker is $90. During the period, the following transactions occurred:

Purchased materials to produce 2,000 speaker units.

Applied conversion costs to production of 1,800 speaker units.

Completed and transferred 1,700 speaker units to finished goods.

Sold 1,600 speaker units.

There were no inventories at the beginning of the period.

a. Journalize the summary transactions (1)-(4) for the period.

Speaker assembly cell, estimated costs: Labor $30,000 Depreciation 12,000 Supplies 6,000 Power 2,000 Total cell costs for the period $50,000 Vintage Audio Inc. manufactures audio speakers. Each speaker requires $48 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period Speaker assembly cell, estimated costs Labor Supplies Power Total cell costs for the period $30,000 12,000 6,000 2,000 $50,000 The operating plan calls for 800 operating hours for the period. Each speaker requires 24 minutes of cell process time. The unit selling price for each speaker is $90. During the period, the following transactions occurred: 1. Purchased materials to produce 2,000 speaker units. 2. Applied conversion costs to production of 1,800 speaker units. 3. Completed and transferred 1,700 speaker units to finished goods. 4. Sold 1,600 speaker units. There were no inventories at the beginning of the period. a. Journalize the summary transactions (1)-(4) for the period 1. Raw and In Process Inventory Accounts Payable 2. Raw and In Process Inventory Conversion Costs Finished Goods Inventory Raw and In Process Inventory

Explanation / Answer

Solution a:

Predetermined rate for conversion cost = Estimated conversion cost / Estimated oeprating hours

= $50,000 / 800 = $62.50 per hour

Cost per unit of speaker = Direct material + Conversion Cost = $48 + ($62.50*24/60) = $73 per unit

Solution b:

Ending balance of Raw and in process inventory = $96,000 + $45,000 - $124,100 = $16,900

Finished goods inventory ending balance = $124,100 - $116,800 = $7,300

Journal Entries - Vintage Audio Inc. Event Particulars Debit Credit 1 Raw and In Process Inventory Dr $96,000.00         To Accounts Payable (2000*$48) $96,000.00 2 Raw and In Process Inventory Dr $45,000.00         To Conversion cost (1800/60*24*$62.50) $45,000.00 3 Finished goods inventory Dr (1700*$73) $124,100.00         To Raw and In Process Inventory $124,100.00 4.1 Accounts receivables Dr (1600*$90) $144,000.00         To Sales $144,000.00 4.2 Cost of goods sold Dr (1600*$73) $116,800.00         To Fininshed goods invenotry $116,800.00

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