Lean Accounting Com-Tel Inc. manufactures and assembles two models of smartphone
ID: 2438132 • Letter: L
Question
Lean 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:
Com-Tel plans 2,000 hours of production for the Lion Model cell for the year. The materials cost is $46 per unit. Each assembly requires 15 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:
Electronic parts were purchased to produce 6,800 Lion Model assemblies in May.
Conversion costs were applied for 6,450 units of production in May.
6,320 units were completed and transferred to finished goods in May.
6,130 units were shipped to customers at a price of $216 per unit.
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).
4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.
5. Lean accounting is different from traditional accounting because it is more (complex or simplied?) and uses ( maximum or minimal?? control. As a result, the number of transactions are (increased or reduced?? . In many lean operations, purchased materials are charged to a (raw and in process inventory account or materials and indirect labor account?? . Direct labor is frequently (included as a conversion cost of the cell or disregarded in the cost allocation process?? . Often, nonfinancial performance measures, such as , are used to monitor performance.
Conversion Cost Categories Budget Labor $71,300 Supplies 27,000 Utilities 9,700 Total $108,000Explanation / Answer
Answers
1
. Budgeted cell conversion cost per hour = $108,000/ 2,000hours = $54 per hour
2
. Budgeted cell conversion cost per unit = $108,000/8,000 = $13.5 per unit
Number of units assembled = (2,000hours x 60)/ 15 minutes = 120,000 mines/15 mines = 8,000units
3.
a.
Raw and In Process Inventory
312800
Accounts Payable (6,800x $46)
312800
b.
Raw and In Process Inventory
87,075
Conversion Costs (6,450 x $13.5)
87,075
c.
Finished goods inventory [6,320x ($46+ $13.5)]
85,366
Raw and In process inventory
85,366
d. Sale
Accounts receivable (6,130x $216)
1,324,080
Sales
1,324,080
d. Cost
Cost of goods sold [6,130x ($46 + $13.5)]
364,735
Finished goods inventory
364,735
4.
Raw and in process inventory: $312800+ $87,075- $85,366= $485,241
Finished Goods Inventory: $85,366- $364,735= -$279369
5
In the just-in-time accounting, direct labor is frequently eliminated as a rate category and is instead included as a conversion rate of the cell. The cell conversion rate is also applied in to the raw and in the process inventory account. In addition, indirect labor is indirectly assigned to product cells; thus, less factory overhead is allocated to the products
a.
Raw and In Process Inventory
312800
Accounts Payable (6,800x $46)
312800
b.
Raw and In Process Inventory
87,075
Conversion Costs (6,450 x $13.5)
87,075
c.
Finished goods inventory [6,320x ($46+ $13.5)]
85,366
Raw and In process inventory
85,366
d. Sale
Accounts receivable (6,130x $216)
1,324,080
Sales
1,324,080
d. Cost
Cost of goods sold [6,130x ($46 + $13.5)]
364,735
Finished goods inventory
364,735
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