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:

Conversion Cost Categories		Budget
Labor		$95,000
Supplies		36,000
Utilities		13,000
Total		$144,000

Com-Tel plans 2,400 hours of production for the Lion Model cell for the year. The materials cost is $51 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:

1. Electronic parts were purchased to produce 8,150 Lion Model assemblies in May.
2. Conversion costs were applied for 7,750 units of production in May.
3. 7,600 units were completed and transferred to finished goods in May.
4. 7,370 units were shipped to customers at a price of $240 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). If an amount box does not require an entry, leave it blank.

a.
b.
3.
4. Sale
4. Cost

4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.

Raw and In Process Inventory	$
Finished Goods Inventory	$

Answer 1

1. Budgeted cell conversion cost per hour = $144000/2400 hours = $ 60per hour

2. Budgeted cell conversion cost per unit = $144000/9600 = $15 per unit

Number of units assembled = (2400 hours x 60)/15 minutes = 9600 units

3. Journal entry

4. Raw and In process inventory: $415650+ $116250- $501600= $30300

Finished Goods Inventory: $501600- $486420= $15180