Motion Media Inc. uses a just-in-time strategy to manufacture DVD players. The c

Question

Motion Media Inc. uses a just-in-time strategy to manufacture DVD players. The company manufactures DVD players through a single product cell. The budgeted conversion cost for the year is $957,600 for 2,280 production hours. Each unit requires 12 minutes of cell process time. During May, 990 DVD players are manufactured in the cell. The materials cost per unit is $60. The following summary transactions took place during May:

Materials are purchased for May production.

Conversion costs were applied to production.

990 DVD players are assembled and placed in finished goods.

940 DVD players are sold for $255 per unit.

a. Determine the budgeted cell conversion cost per hour. If required, round to the nearest dollar.

b. Determine the budgeted cell conversion cost per unit. If required, round to the nearest dollar.

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

Explanation / Answer

a)Conversion cost per hour = 957600 /2280 = $ 420 per hour

b)Conversion cost per unit = Material cost +conversion cost

                                               = 60 + (12* 420 / 60)

                                               = 60 + 84

                                             = $ 144 per unit

c )

Date Titlle Debit credit a Raw material inventory     [990*60] 59400 Accounts payable   /cash 59400 [being material purchased b Work in process 83160 Conversion cost    (12*990 *420 /60 ) 83160 [being conversion cost applied) c Finished goods inventory   [83160 +59400] 142560 Work in processs 142560 d Accounts receivable 239700 Sales   (940 *255) 239700 [being DVD sold ] Cost of goods sold 138151 Finished good sinventory 138151 [being cost of goods sold recorded) [142560* 940 /990]

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