Question

Lean Accounting

The annual budgeted conversion costs for a lean cell are $218,880 for 1,900 production hours. Each unit produced by the cell requires 10 minutes of cell process time. During the month, 2,710 units are manufactured in the cell. The estimated materials costs are $46 per unit.

(Round the per unit cost to the nearest cent and use in subsequent computations. If required, round your answers to the nearest dollar.)

Journalize the following entries for the month:

a. Materials are purchased to produce 2,850 units.

b. Conversion costs are applied to 2,710 units of production.

c. The cell completes 2,570 units, which are placed into finished goods.

If an amount box does not require an entry, leave it blank.

a.
b.
c.

Answer 1

a	Raw and in process inventory	131100		=2850*46
	Accounts Payable		131100
b	Raw and in process inventory	52032		=2710*19.20
	Conversion costs		52032
c	Finished goods inventory	167564		=2570*(46+19.20)
	Raw and in process inventory		167564

Workings:

Budgeted cell conversion cost per hour	115.20	per hour	=218880/1900
Budgeted cell conversion cost per unit	19.20	per unit	=115.20*(10/60)