Question

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost...

Modern Lighting Inc. manufactures lighting fixtures, using lean manufacturing methods. Style Omega has a materials cost per unit of $120. The budgeted conversion cost for the year is $192,000 for 2,000 production hours. A unit of Style Omega requires 15 minutes of cell production time. The following transactions took place during June:

1. Materials were acquired to assemble 800 Style Omega units for June.
2. Conversion costs were applied to 800 Style Omega units of production.
3. 785 units of Style Omega were completed in June.
4. 770 units of Style Omega were sold in June for $174 per unit.
Required:
a. Determine the budgeted cell conversion cost per hour.
b. Determine the budgeted cell conversion cost per unit.
c.

Journalize the summary transactions (1)-(4) for June. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
Modern Lighting Inc.
General Ledger
ASSETS
110 Cash
120 Accounts Receivable
125 Notes Receivable
140 Office Supplies
141 Store Supplies
142 Prepaid Insurance
150 Raw and In Process Inventory
151 Finished Goods Inventory
180 Land
190 Equipment
191 Accumulated Depreciation-Equipment
LIABILITIES
210 Accounts Payable
216 Salaries Payable
218 Sales Tax Payable
219 Customers Refunds Payable
221 Notes Payable
EQUITY
31 Common Stock
32 Retained Earnings
33 Dividends
34 Income Summary
REVENUE
410 Sales
EXPENSES
510 Cost of Goods Sold
511 Conversion Costs
521 Advertising Expense
523 Depreciation Expense-Equipment
526 Salaries Expense
531 Rent Expense
533 Insurance Expense
534 Store Supplies Expense
535 Office Supplies Expense
536 Credit Card Expense
539 Miscellaneous Expense
710 Interest Expense

a. Determine the budgeted cell conversion cost per hour.

$ _______________per hour

b. Determine the budgeted cell conversion cost per unit.

$_______________per unit

c. Journalize the summary transactions (1)-(4) for June 30. Refer to the Chart of Accounts for exact wording of account titles.

Question not attempted.

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JOURNAL

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Homework Answers

Answer #1
a) Budgeted cell conversion cost per hour $   96.00 ($ 192000 / 2000)
b) Budgeted cell conversion cost per unit $   24.00 ($ 96 x 15/60)
c) Journal Entries
Particulars Debit Credit
1) Raw and In process inventory $   96,000.00
To Accounts Payable $   96,000.00
(800 x $ 120)
2) Raw and In process inventory $   19,200.00
To Conversion Cost $   19,200.00
(800 x $ 24)
3) Finished Goods Inventory $ 113,040.00
To Raw and In process inventory $ 113,040.00
(785 x $ 144)
4) Accounts Receivable $ 133,980.00
To Sales $ 133,980.00
(770 x $ 174)
Cost of Goods sold $ 110,880.00
To Finished Goods Inventory $ 110,880.00
(770 x $ 144)
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