Lean Accounting Modern Lighting Inc. manufactures lighting fixtures, using lean

Question

Lean Accounting

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $16. The budgeted conversion cost for the year is $308,000 for 2,200 production hours. A unit of Style Omega requires 18 minutes of cell production time. The following transactions took place during June:

Materials were acquired to assemble 620 Style Omega units for June.

Conversion costs were applied to 620 Style Omega units of production.

600 units of Style Omega were completed in June.

580 units of Style Omega were sold in June for $100 per unit.

a. Determine the budgeted cell conversion cost per hour.
$ per hour

b. Determine the budgeted cell conversion cost per unit.
$ per unit

Feedback

c. Journalize the summary transactions (1)–(4) for June.

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

Explanation / Answer

a. Determine the budgeted cell conversion cost per hour.
$ per hour

conversion cost per hour=budgeted conversion cost / production hours =308000/2200=$140 Per hr

Determine the budgeted cell conversion cost per unit

=$140 Per hr * 18/60

=$42 per unit

DR CR Raw and in prcess inventory 9920 Account Payable 9920 (620*16) Raw and in prcess inventory 26040 Conversion cost 26040 (620*42) Finshed good Inventory 34800 Raw and in prcess inventory 34800 600*58 Account Receivable 58000 sales 58000 580*100 cost of goods sold 33640 Finshed good Inventory 33640 580*58

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