Lean Accounting Com-Tel Inc. manufactures and assembles two models of smartphones-the Tiger Model and the Lion...
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|
Com-Tel plans 2,000 hours of production for the Lion Model cell for the year. The materials cost is $41 per unit. Each assembly requires 24 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:
- Electronic parts were purchased to produce 6,800 Lion Model assemblies in May.
- Conversion costs were applied for 6,450 units of production in May.
- 6,320 units were completed and transferred to finished goods in May.
- 6,130 units were shipped to customers at a price of $192 per unit.
If required, round your answers to the nearest cent.
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).
4. Determine the ending balance in Raw and In Process Inventory and Finished Goods Inventory.
|Raw and In Process Inventory||$|
|Finished Goods Inventory||$|
5. Lean accounting is different from traditional accounting because it is more and uses control. As a result, the number of transactions are . In many lean operations, purchased materials are charged to a . Direct labor is frequently . Often, nonfinancial performance measures, such as , are used to monitor performance.
1)Conversion cost per hour = $96,000 /2000 = $48 per hour 2)budgeted cell conversion cost per unit. = Manufacturing Time × Cell Conversion Cost Rate = 24/60×$48 = $19.20 per unit 3) Sr. No Accounts Titles Debit $ Credit $ A. Raw and in process inventory 2,78,800 account payable(6800×41) 2,78,800 B. Raw and in process inventory 1,23,840 conversion cost(6450×19.20) 1,23,840 C. Finished goods inventory(6320×(19.20+41)) 3,80,464 raw and in process inventory 3,80,464 D. Sale account receivable 11,76,960 sales(6130×192) 11,76,960 D. Cost cost of goods sold(6130×(19.20+41)) 3,69,026 finished goods inventory 3,69,026 4) Ending balance of Raw and in process inventory: $278,800+123,840 - $380,464 = $22,176 Finished goods inventory = Cost of goods manufactured - Cost of goods sold = $380,464 - $3,69,026 = $11,438