Homework SourseModern Lighting Inc manufactures lighting fixtures using lea
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:
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 for June 30. Refer to the Chart of Accounts for exact wording of account titles.
| 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. |
Solution
Answer-
a. Budgeted Conversion cost for 2000 hours = $192,000
Conversion cost per hour = $96 (192000/2000)
b. 15 minutes production time = 1 unit
1 hour production time = 4 unit
2000 hours production time = 8000 units (4*2000)
Budgeted conversion cost for 8000units = $192,000
Conversion cost for per unit = $24 (192000/8000)
c. 1. Raw and In Process Inventory Dr. 96,000 (800*120)
To Cash /accounts payable 96,000
(Purchasing the material for 800 units)
2. Conversion Cost Dr. 18,840 (785*$24/unit)
To Salaries Payable 18,840
(recording the labour salaries for 785 units produced)
3. Finished Goods Inventory Dr. 113,040
To Raw and In Process Inventory 94,200
To Conversion Cost 18,840
(recording the finished goods production cost for 785 units)
4. Cost of goods sold Dr. 113,040
To Finished goods inventory 113,040
(recognizing the cost of gold sold for 785 units)
5. Cash/Accounts Receivable Dr. 133,980 (Plus 133,980@Sales tax, if any)
To sales 133,980
To sales tax payable if any
(recognizing sales and sales tax for 770 units )
